Teresa Scassa - Blog

Teresa Scassa

Teresa Scassa

“Working at the Intersection of Law and Science: Reflections on a Fruitful Collaboration” (with J. Chandler, Y. Bédard, and M. Gervais), in Nicholas Chrisman & Monica Wachowicz, eds., Spatially Enabling Government, Industry and Citizens: Research and Development Perspectives, 2012.

Abstract. It is relatively rare for largely scientific collaborations to involve researchers from law, and when this is done, their contributions are often peripheral to the goals of the main project which are to advance scientific or technological knowledge and to develop applied outcomes. GEOIDE Phase IV broke with this tradition by funding a science-led collaborative research project that put legal and ethical issues squarely at the forefront of the research agenda. In our project, the researchers sought to examine what legal considerations were relevant to the evolution of GIS-related practices, how technological innovations and standards should adapt to normative frameworks, and where law reform might be needed to advance the goals of GIS in a rapidly changing information environment. In this chapter, the authors reflect on the merits and challenges of such an approach, drawing from their own experience as legal researchers and as scientists within a predominantly science and technology-oriented research network.

 

Available from the author.

The recent Alberta Court of Appeal decision in United Food and Commercial Workers, Local 401 v. Alberta (Attorney General) raises interesting issues regarding the relationship of data protection legislation to the constitutionally guaranteed freedom of expression.

The dispute arose after a union representing striking casino workers set up a picket line at the mall entrance to the casino. As part of the picketing activity, the Union videotaped the picket line and also took still photographs of persons crossing the line to enter the casino. Signs posted nearby indicated that photographs and videos might be featured on strike-related website. Different things were done with the images; some were posted online on the union’s website, and a still photo of the Casino Vice-President was used in unflattering ways in the Union newsletter and on leaflets. Following a complaint by some of the filmed individuals, an adjudicator under Alberta’s Personal Information Protection Act (PIPA) found that the photos and videos constituted personal information and that it had been collected, used and disclosed without notice or consent, as required by the Act. She also found that the exception to the application of PIPA for personal information that is collected, used or disclosed for “journalistic purposes and no other purpose” did not apply because the Union had multiple purposes for its actions, most of which were not journalistic. She found that the Union could argue that the information was collected, used or disclosed for the purposes of a possible investigation or legal proceeding, as disputes often broke out on picket lines. However, she ruled that the relevant exception would only be available if notice had been given of this purpose for collection. According to the adjudicator, the scope of this exception, if it had been available, would not have extended to the publication of the materials on the website, or the use of the still photos in the newsletter and elsewhere.

The Union sought judicial review of the decision, arguing in particular that their Charter right to freedom of expression had been infringed. Justice Goss of the Alberta Court of Queen’s Bench agreed, and she ordered that the regulation defining “publicly available information” be struck down for being under inclusive, and that the words “and for no other purpose” found in the exception to the Act for journalistic purposes should also be struck down. She also ordered a temporary suspension of invalidity to permit the Alberta legislature to address the defects in the legislation.

The Attorney-General of Alberta appealed this decision to the Alberta Court of Appeal. Although the Court of Appeal agreed with Justice Goss that PIPA posed certain constitutional issues, it disagreed with her as to the source of these issues and the appropriate remedies. It rejected the conclusion that the regulations defining “publicly available information” were relevant, observing correctly that “[u]nder the Act, “personal” information is not the same as “private” information” (at para 10). It spent more time on the s. 4(3)(c) exception to the application of the Act where information is collected, used or disclosed “for journalistic purposes and for no other purpose.” The Union had argued that posting the information on its website or in its pamphlets or newsletters served journalistic purposes, and that the consent of the photographed individuals should not have been required.

The Court of Appeal noted that it was possible to give this provision effect in two ways. The first would be to find that any information that was collected for journalistic purposes as well as other purposes was entirely tainted by those other purposes, and thus could not qualify for the exception. The second would be to find that the information could be collected, used or disclosed without consent for journalistic purposes, but consent would have to be obtained for any other purposes. The Court preferred the latter interpretation, noting that organizations may have many different objectives and purposes. It wrote: “even though the union’s purpose is not primarily journalistic, to the extent that it does engage in journalistic activities it is entitled to rely on the exemption in the Act for that purpose.” (at para 52) Because this approach was adopted, the Court found it unnecessary to rule (as had Justice Goss) that the terms “and for no other purpose” in s. 4(3)(c) were unconstitutional.

The Court next considered the scope of the exception for journalistic purposes in order to determine whether the Union’s activities were captured by it. It opted for a relatively narrow interpretation. It found that the Union’s activities in filming the picket line were not primarily journalistic, but rather focused on “labour relations, collective bargaining, and the economic dynamics of a strike.” (at para 57). It noted: “Just because the union might have to communicate with its members and the public about the strike in order to accomplish its labour relations objectives does not turn the whole exercise into journalism.”(at para 57). The Court was of the view that it was not appropriate to cram the union’s activities into “journalism” in order to conduct a constitutional assessment. Rather, the issue should be whether PIPA, by creating barriers to the Union’s expression in the context of a strike, cast an appropriate balance between the goals of protecting personal information and the freedom of expression.

The jurisprudence is clear that picketing is an expressive activity that is also linked to the freedom of association. The Court of Appeal acknowledged that the decision of the adjudicator in this case did not impact on the right to picket. However, it did place limits on what could be done with photos and recordings made of the picket line activities. According to the Court, recording and distributing images and videos is an activity directly related to the purposes of picketing, which has both an informational and a dissuasive component. Because recordings of people crossing the picket line “spreads news of the picket line to a wider audience . . . [and] tends to increase the pressure on those who might be tempted to cross the picket line” (at para 64), it constitutes expressive activity. Although there is a coercive element to this type of expression, the Court observed that unpleasant speech is protected by the constitution. It stated: “so long as there is no promotion of violence or other illegal activity, a reasonable amount of psychological pressure may be brought to bear on all those involved.” (at para 66)

Because the recording and dissemination of images of people crossing the picket line is expressive conduct, the Court of Appeal concluded that the adjudicator’s decision that the images could not be collected, used or disclosed without consent, violated the Union’s freedom of expression rights. The Court accepted that PIPA served a pressing and substantial objective (protecting against the misuse of personal information), and that placing limits on the collection, use and disclosure of personal information was rationally connected to that objective. However, it found that there was no proportionality in the legislation because it was not drafted “in a manner that is adequately sensitive to Charter rights.” (at para 73). The Court’s comments on the elements of overbreadth of PIPA are interesting.

In the first place, the Court suggests that PIPA is overbroad for having “no functional definition” of the term “personal information”. Yet the core of the definition (“information about an identifiable individual”) is essentially shared by private and public data protection statutes across Canada. According to the Court, it is necessary for the Commissioner to narrow this definition in order to make it compliant with Charter values. However, the structure of the legislation is such that, although the definition is broad, the Act contains many exceptions to its application or to the requirements of consent for collection, use or disclosure of personal information in particular contexts or circumstances. It is not at all clear that the definition is the problem. The court may be looking for a definition that would exclude information about people in public places, yet such an exception to the application of the law (as inadvisable as it might be) could be created without changing the definition. It should be noted that shrinking the scope of the definition might also mean that the legislation would no longer qualify as “substantially similar” to PIPEDA.

The objection to the definition of personal information is thus closely linked to the Court’s second objection, which is that PIPA does not contain a general exception for information “that is personal, but not at all private”. Without citing any examples, the Court claims that “the comparative statutes in some provinces exempt activity that occurs in some public places.” (at para 73). It is not clear to what the court is referring, as the only other provinces with private sector data protection statutes are B.C. and Quebec, and neither statute has the kind of exemption described. The court is most likely referring to statutes in some provinces which create torts of invasion of privacy, and which set certain contextual boundaries for the torts. The situations are not at all equivalent. It is entirely appropriate that an individual’s ability to allege an invasion of their privacy be considered in light of circumstances that include whether they were engaged in activity in a public place. However, the data protection context is different. Data protection laws protect individuals against the collection, use and disclosure of their personal information by private sector actors. There is no obvious reason why an exception to the law should be carved out to permit companies to cull personal information about individuals from multiple sources regarding their movements in public spaces. It is important to note that video surveillance cameras and cell phone location information could both fall within this category of information.

The Court also objects to the “artificially narrow” definition of “publicly available information”. This objection is also problematic. The publicly available information exception is narrowly crafted, and is limited to things such as public telephone directory listings, public government registries, court and tribunal records, and the like. The exception is only available where the information is used for the purposes for which it was made publicly available, and where the collection, use or disclosure being made is for purposes which a reasonable person would consider appropriate in the circumstances. In all cases, the categories of publicly available information are ones where it could be said that the individual has either consented to the information becoming public (for example, directory listings only constitute publicly available information where the individual has been given an option to delist their number), or where the government has mandated by law that such information is to be public (in the case of registries, or court decisions). Information published in a newspaper, magazine or other publication is only publicly available information if “it is reasonable to assume that the individual that the information is about provided that information” (PIPA Regulation, s. 7(e)(ii).) Here again, one finds the notion of consent to a specific use of the information. The exceptions are crafted narrowly because to do otherwise would substantially disrupt the balance in the Act, making all manner of personal information open to collection, use or disclosure without consent. Expanding the definition of publicly available information to include activities in public lacks both the consent element and the specific purpose as a limiting condition.

The Court also objects to the fact that there is “no special exemption for information collected and used for free expression”. In an article critical of the wording of the journalistic purposes exception, I consider a number of problems with the journalistic purposes exception. I have argued that indeed the formulation in Quebec’s private sector data protection legislation is broader than that used in PIPA or PIPEDA, as it refers to journalistic information that is communicated for “the legitimate information of the public”, rather than for the more obscure “journalistic purposes”. This gives somewhat more scope to the exception. However, I note that the effect of the Quebec exception is to permit the Commissioner to consider whether a communication was for “the legitimate information of the public”. In other words, it does not function as an outright exception to the application of the Act (as does the journalistic purposes exception). Rather, it allows the Commissioner to consider the scope and manner of the communication in order to determine whether the balance between freedom of expression and privacy has been appropriately struck. Given the significant developments in the new media, it may well be time to revisit the journalistic purposes exception in data protection laws; this must be done, however, in a thoughtful and considered manner.

Finally, the Court objects to the fact that “there is no exemption allowing organizations to reasonably use personal information that is reasonably required in the legitimate operation of their business.” (at para 73). This is puzzling since this seems to be a central purpose of data protection legislation. The statute as a whole is a scheme designed to permit just that – while at the same time giving individuals some right to control how their personal information is collected, used and disclosed.

Ultimately the Court wisely chose to simply quash the decision of the adjudicator, rather than to declare any portion of the statute unconstitutional. According to the Court, it is up to the legislature “to decide what amendments are required to the Act in order to bring it in line with the Charter.” (at para 81). Any such reform initiative by the legislature should be one that gives a much more careful consideration to the structure of the Act as a whole, and the complex web of interests that are already finely balanced.

 

Below is the statement I made to the House of Commons Standing Committee on Access to Information, Privacy and Ethics on May 31, 2012. The Standing Committee had convened hearings on the following motion:

Be it Resolved: That the Committee study the efforts and the measures taken by Google, Facebook and other social media to protect the personal information of Canadians, and that the Committee report its findings back to the House.

I would like to begin by saying that I think it is very important that more attention be given to data protection and privacy in relation to the activities of social media companies. I do find it somewhat ironic, however, that the Committee’s mandate has been framed in terms of studying the efforts and measures taken by social media companies to protect the personal information of Canadians. It is a bit like studying the efforts made by foxes to protect the lives of the chickens.

I note that to the extent that Google, Facebook and other social media companies attempt to protect the personal information of Canadians, these efforts are shaped by data protection law. The adequacy of our data protection legislation must therefore be a focus of attention. The amendments from the first five year review of 2006 have yet to make it through Parliament; the second five year review is already late in getting underway. These should be matters for concern, particularly since the data protection environment has changed substantially since the law was first enacted. The current law is particularly weak with respect to enforcement. The Commissioner has no order making powers and lacks the ability to impose fines or other penalties in the case of particularly egregious conduct.

The focus on social media and privacy has two broad aspects. The first relates to how individuals use these tools to communicate amongst themselves. In this regard we hear concerns about employers accessing Facebook pages, people posting the personal information of other people online, criminals exploiting Facebook information, and so on. These are concerns about information that individuals choose to share, the consequences of that sharing, and the norms that should govern this new mode of interpersonal exchange. The second aspect, and the one on which I will focus my attention is on the role of these companies in harvesting – or in facilitating the harvesting – of massive amounts of information about us in order to track our online activity, consumption habits, and even patterns of movement. In this respect, attention given to large corporations such as Facebook and Google is important, but there are also many other players in the digital environment who are engaging in these practices.

The business models of social media companies are generally highly dependent upon the personal data of their users. In fact, social networking, search engines, email and many other services are offered to us for free. By hosting our content and tracking our activities, these services are able to extract a significant volume of personal data. The nature and quality of this data is enhanced by new innovations. For example, information about the location and movements of individuals is highly coveted. More and more individuals carry with them location enabled smart phones and they use these devices for social networking and other online activities. Even computer browsers are now location-enabled, and thus information about our location is routinely gathered in the course of ordinary internet activities.

The point is that more and more data of increasingly varied kinds are being sought, collected, used and disclosed. This data is compiled, matched and mined in order to profile consumers for various purposes including targeted behavioural marketing. In some cases, this data may be shared with third party advertisers, with application developers or with related companies. Even where the data is de-identified, its fine-textured nature may still leave individuals identifiable, as companies such as AOL and Netflix have learned the hard way. Individuals may also still be identifiable from detailed profile information, and the substantial volumes of information gathered about us make us highly vulnerable to data security breaches of all kind.

It has become very difficult to protect our personal data, particularly in contexts where privacy preferences are set once (and often by default) and the service is one which we use daily or even multiple times each day. It is often difficult to determine what information is being collected, how it is being shared and with whom. Privacy policies are often too long, unclear, and remote for anyone to actually read and understand. We now enter into a myriad of transactions each day and there simply isn’t time or energy to properly “manage” our data. It is a bit like walking through a swamp and being surrounded by a cloud of mosquitoes. To avoid being bitten we can swat away; we can even use insect repellents or other devices, but in the end we are inevitably going to be bitten, often multiple times.

It is also becoming increasingly difficult to avoid entering this swamp. People use social media to keep family and friends close, regardless of how far apart they live, or because the social network communities have become a part of how their own peer groups communicate and interact. Increasingly businesses, schools, and even governments are developing presences in social media, which give even more impetus to individuals to participate in these environments. Traditional information content providers are also moving to the Internet and to Facebook and Twitter, and are encouraging their readers/viewers/listeners to access their news and other information online and in interactive formats. These tools are rapidly replacing traditional modes of communication.

To date, our main protection from the exploitation of our personal information in these contexts has been data protection law. Data protection laws are premised on the need to balance the privacy interests of consumers with the needs of businesses to collect and use personal data. But in the time since PIPEDA was enacted, this need has become a voracious hunger for more and more data, retained for longer and longer periods of time. The need for data has shifted from information required to complete transactions or to maintain client relationships to a demand for data as a resource to be exploited. This shift risks gutting the consent model on which the legislation is based. This new paradigm deserves special attention and may require different legal norms and approaches.

Under the traditional data protection model, the goal was to enable consumers to make informed choices about their personal data. In the big data context, informed choices are virtually impossible to make. Beyond this, there is an element of servitude that is deeply disturbing. Nancy Obermeyer uses the term “volunteered geoslavery” to describe a context where location-enabled devices report on our movements to any number of companies without us necessarily being aware of this constant stream of data. She makes the point that equipping individuals with sensors that report on their activities leaves them vulnerable to dominance and exploitation; yet this is a growing reality in our everyday lives. Going beyond the simple collection of data, social networking services encourage users to make these sites the hub of their daily activities and communications.

Our personal data is a resource that businesses large and small regularly exploit. The data is used to profile us so as to define our consumption habits, to determine our suitability for insurance or other services, or to apply price discrimination in the delivery of wares or services. We become data “subjects” in the fullest sense of the word. There are few transactions or activities that do not leave a data trail.

As noted earlier, many so-called “free” services such as social networking sites, document sharing sites, cool applications, and even internet searching, are actually premised upon the ability to extract user data. In the 2011 decision of the Quebec Superior Court in St. Arnaud c. Facebook a judge refused to certify a class action law suit against Facebook. To do so would have required classifying the terms of use for the site as a consumer contract so that Quebec law could override the clause that provided that all disputes would be settled under the laws of California and adjudicated by California courts. The Quebec Court found that there was no consumer contract because the Facebook service is entirely free, whereas a consumer contract “is premised on payment and consideration.” The judge found that there was no obligation placed on users that could be regarded as a form of consideration.

This case demonstrates how the provision of personal data is overlooked as an element of the contract between the company and the individual. It is treated as a matter governed by the tangential privacy policies. This lack of transparency regarding the quid pro quo makes it the consumer’s sole responsibility to manage their personal information. Concerns that excessive amounts of personal information are being collected can then be met by assertions that people just don’t care about privacy. To regard the sharing of personal data as part of a consumer contract for services, by contrast, places both competition law and consumer protection concerns much more squarely in the forefront. In my view, it is time to explicitly address these concerns.

Another social harm potentially posed by big data is of course, discrimination. Oscar Gandy has written about this in his most recent book. We understand how racial profiling leads to injustice in the application of criminal laws. Profiling, whether based on race, sex, sexual orientation, religion, ethnicity, socio-economic status or other grounds, is a growing concern in how we are offered goods or services. Through big data, corporations develop profiles of our tastes and consumption habits; they channel these back to us in targeted advertising, recommendations and special promotions. When we search for goods or services, we are presented first with those things which we are believed to want. We are told that profiling is good because it means we don’t have to be inundated with marketing material for products or services that are of little interest. Yet there is also a flip side to profiling. It can be used to characterize individuals as unworthy of special discounts or promotional prices; unsuitable for credit or insurance; uninteresting as a market for particular kinds of products and services. Profiling can and will exclude some and privilege others.

I have argued that big data alters the data protection paradigm, and that social networking services, along with many other “free” internet services are major players in this regard. To conclude my remarks, I would like to focus on the following key points.

1) The collection, use and disclosure of personal information is no longer simply an issue of privacy, but raises issues of consumer protection, competition law, and human rights;

2) The nature and volume of personal information collected from social media sites and other “free” internet services goes well beyond transaction information and relates to the activities, relationships, preferences, interests and location of individuals;

3) Data protection law reform is overdue, and may now require a reconsideration or modification of the consent-based approach, particularly in contexts where personal data is treated as a resource and personal data collection extends to movements, activities and interests;

4) Changes to PIPEDA should include greater powers of enforcement for data protection norms, which might include order-making powers, and the power to levy fines or impose penalties in the case of egregious or repeated transgressions.

Insurance Corp. of British Columbia v. Stainton Ventures Ltd. is a recent decision of the British Columbia Supreme Court that addresses the issue of the use of trademarks in domain names. The plaintiff in the case, the Insurance Corp. of British Columbia (ICBC) objected to the use by the defendant Stainton Ventures Ltd. of its ICBC mark in its domain names, on its website, and on a booklet which it produced for sale. The defendant, through its website and booklet, offered advice on how to deal with B.C.’s motor vehicle insurer.

The defendant’s website was initially established in 2006 with the URLs <fightICBC.ca> and <fightICBC.com>. The site provided information about dealing with ICBC, and also listed the names and contact information of health care professionals. At the time, ICBC contacted the listed health care professionals and drew their attention to the listings. The defendant received feedback from a number of these professionals, who apparently objected to the rather adversarial domain name of the website. It subsequently changed its business cards, website references and other materials to ICBCadvice, and registered the new domain names of <icbcadvice.ca> and <icbcadvice.com>. In 2008, it began offering for sale from its website a publication titled ICBC Claim Guide.

In 2009 the defendant received its first cease and desist letter regarding the use of the ICBC acronym. Justice Grauer of the B.C. Supreme Court noted that although it was only in 2008 that there was an actual commercial offering from the site, it was clear from the outset that the site had served a marketing function for the defendant’s law practice. After receipt of the cease and desist letter, the title of the claim guide was changed to ICBCadvice Claim Guide. No other concessions were made by the defendant.

The plaintiff applied by way of summary trial for declarations that the defendant was infringing its rights in its official mark ICBC, that it was passing off its wares and services as those of ICBC, and that it was in violation of s. 52 of the Competition Act for having made false or misleading representations. The court ruled against ICBC on all counts.

The first issue was whether the defendant had infringed the plaintiff’s rights in ICBC’s official mark “ICBC”. Section 11 of the Trade-marks Act provides that “No person shall use in connection with a business, as a trade-mark or otherwise, any mark adopted contrary to section 9 or 10 of this Act....” Section 9(i)(n)(iii) prohibits the adoption of a mark “in connection with a business, as a trade-mark or otherwise, any mark consisting of, or so nearly resembling as to be likely to be mistaken for” an official mark. Justice Grauer rejected the plaintiff’s argument that the defendant’s mark was identical to its ICBC mark because it reproduced the ICBC mark. Instead, he chose to consider whether “ICBCadvice” so nearly resembles “ICBC” as to likely be mistaken for it. Justice Grauer was persuaded by the defendant’s argument that there was no evidence of confusion on the part of visitors to the website. He noted: “The evidence just does not support the contention that through its domain names, the defendant either intended or accomplished the redirection to its site of traffic looking for ICBC’s own website...” (at para 25). Further, he found that drivers in B.C., who were very familiar with the ICBC mark, would not likely be confused into thinking that the ICBCadvice domain names were linked to the official mark. He concluded that “they would take it as identifying the subject-matter of the site, not whose site it is” (at para 26). However Justice Grauer does not consider whether consumers would be likely to think that the subject matter of the site (advice about ICBC) emanated from the insurance company itself, as opposed to some other party. In fact, the official ICBC site also provides advice to customers on how to proceed with making a claim.

Justice Grauer noted that he also would not have found the “fighticbc” domain names to be infringing. There would seem to be at least an argument that “fighticbc” is much less likely to be confusing than “icbcadvice”, since ICBC is less likely to advocate fighting itself than it might be to provide advice to motorists on how to proceed with a claim. The discussion in this respect is unsatisfying. While most domain name cases seem to reject domain names for critical websites that merely use the unmodified trademark of the target company, there is still a lack of clarity as to what kind of modifying language will suffice to make it clear that the site to which the domain name resolves is not that of the target company. In addition, the case law around domain names and critical sites usually involves non-commercial criticism or protest sites; the impact of the commercial dimensions of the defendant’s site in this case is not fully discussed. While I do not necessarily disagree with the outcome of this case, it would have been helpful to have a closer consideration of these key issues.

Justice Grauer did find that the original version of the defendant’s commercial claim guide violated s. 11 of the Trade-marks Act. Its cover featured ICBC in large type with “Claim Guide” below in a much smaller font. However, the revised cover, which reads “ICBCadvice Claim Guide” passed muster. He made an order restraining the distribution of the original guide, but not the revised version.

Justice Grauer dismissed the passing off arguments relating to the website and the domain names. Although it was clear that ICBC had goodwill in its mark, he found that the “ordinary average automobile insurance customer” would not be confused into believing there was a business connection between the defendant’s website and the complainant. Once again, his analysis seems to focus almost exclusively on the issue of actual confusion. He wrote: “I cannot see how an average customer would be deceived into thinking that the website is somehow associated with or approved by ICBC. There is no evidence of either actual confusion or likelihood of confusion, and as noted, a likelihood of confusion is not so obvious that evidence is unnecessary” (at para 44). He rejected the plaintiff’s argument that search engines would turn up the defendant’s site in any search using the term “ICBC”. He wrote: “The behaviour of search engines is not, in my view, evidence of anything other than the operation of an algorithm, and search-engine marketing. It is certainly not evidence of confusion” (at para 46). He went on to ask: “Is the public so naive as to assume that every hit returned to a search for “ICBC” is somehow associated with or endorsed by the Insurance Company of British Columbia? I suspect that the Industrial and Commercial Bank of China would be rather distressed if that proved to be so” (at para 46). In his view, “the average customer of normal intelligence would not be led astray, and would have no difficulty recognizing that ICBCadvice.com would probably relate to how to deal with ICBC in an arm’s length or even adversarial sense, rather than in a manner endorsed by ICBC” (at para 48). Justice Grauer also quickly dismissed the claims of false and misleading representations under the Competition Act.

The Quebec Court of Appeal has overturned the decision of Justice Zerbisias of the Quebec Superior Court to award $125,000 in extra-judicial costs and punitive damages against a company that lost a trademark infringement suit.

Les Industries Lassonde is the owner of the registered trademarks OASIS and associated marks that feature the word OASIS, for juices, drinks and sherbets. In 2009 they brought a trademark infringement suit against L’Oasis d’Olivia Inc., arguing that the defendant’s mark OLIVIA’S OASIS for body care products was confusing with their OASIS marks. After a five-day hearing, Justice Zerbisias found that there was no likelihood of confusion, nor was there any depreciation of the goodwill associated with the plaintiffs’ mark. She concluded that “to impute the likelihood of confusion between Plaintiff’s and Defendant’s mark to the average consumer would insult him or her by assuming that such consumer is completely devoid of intelligence; of normal powers of observation, recollection and recognition; or, is so totally unaware or uninformed as to the environment in which they are found, that they would be easily deceived about the origin or nature of the wares they purchase.” (at para. 52)

At the end of the trial, counsel for the defendant made an oral motion seeking extra judicial costs and punitive damages against the plaintiffs. They relied upon provisions in the Quebec Code of Civil Procedure that came into effect on June 4, 2009. The Bill which added these provisions was titled “An Act to amend the Code of Civil Procedure to prevent improper use of the courts and promote freedom of expression and citizen participation in public debate.” (S.Q. 2009, c-12) In short, these provisions are a kind of anti-SLAPP legislation. Strategic Lawsuits Against Public Participation (SLAPP) are typically baseless law suits that have as their goal the intimidation of those who are critical of or who oppose certain types of activity. The intimidation is chiefly economic; the cost of defending against a SLAPP suit can be devastating for most individuals or public interest groups.

In this case, the defendant argued that the plaintiffs had “engaged in manifestly unfounded, frivolous, vexations proceedings, excessive and unreasonable in the circumstances, in an attempt to bully it and to prevent it from the lawful exercise of its rights to use its trade-mark and to engage in business under the name of Olivia’s Oasis” (at para 56). Justice Zerbisias agreed. In a very blunt assessment of the conduct of the plaintiffs she found that they had “unnecessarily pursued a claim they knew or should have known would not succeed” (at para 63). She based this conclusion on the sharp differences between the parties’ wares and target clientele, and on the fact that there had been no evidence of any confusion over the 5-year period of concurrent use of the parties’ trademarks. She found as well that the plaintiffs knew that the word OASIS was not a strong mark, and that there were many other registered trademarks incorporating that word, as well as many other businesses in Canada that used the word as part of their business name. Justice Zerbisias noted the disparity in power and resources between the parties, and referred to the plaintiffs’ conduct as “menacing and abusive”.

The plaintiffs did not appeal the judge’s finding of lack of confusion; instead, they confined their appeal to arguing that the award of extra-judicial costs and punitive damages was not justified on the facts, and that even if it was, the calculation of the amount of extra-judicial costs was not based on any evidence and was therefore flawed. In its decision on March 30, 2012, the Court of Appeal agreed on both points. The most significant finding, of course, is that the conduct of the plaintiffs did not amount to the kind of abuse contemplated by articles 54.1 and 54.4 of the Code of Civil Procedure. The Court began by noting that there was nothing in the actual conduct of proceedings that was abusive. The defendant’s argument depended instead on a finding that the proceedings should not have been brought in the first place. In contrast to the trial judge, however, the Court of Appeal found nothing to suggest that the commencement of proceedings was inappropriate. They noted that there was nothing inherently excessive about seeking to enforce one’s trademark rights. Once the plaintiffs had concluded that there was a risk of confusion created by the defendant’s mark, the plaintiffs were within their rights both to oppose its registration and to sue for trademark infringement. The Court noted that this was not simply the normal practice in such situations; it was almost an obligation in order to protect one’s trademark rights.

The Court of Appeal was also unprepared to find that the action commenced by the plaintiffs was doomed to fail from the outset. They noted that the trial judge spent 50 paragraphs of her decision discussing the issue of confusion following a five-day trial and a long period of deliberation. They observed as well that good faith must be presumed, and bad faith must be proven. They found no evidence to support the conclusion that the plaintiffs were motivated by bad faith. While the trial judge had found that other suits brought by the plaintiffs against other holders of marks for vastly different wares or services that incorporated the word “oasis” was evidence of a pattern of conduct, the Court of Appeal refused to draw an inference that this was evidence of harassment of any and all who might use the word “oasis” in relation to a business. They noted that a different inference could well be made: that the plaintiffs sought to protect the distinctiveness of their trademark. The Court indicated that much more evidence would need to be provided to support a finding of bad faith.

The case raises interesting issues about what might constitute sufficient proof of bad faith to give the anti-SLAPP provisions any application in the trademark context. It is certainly the practice for trademark owners to vigorously defend the distinctiveness of their marks; loss of distinctiveness is fatal for a trademark. The kind of disparity in economic power in this case is not unusual in a context where a new entrant in the market place has adopted a trademark that an established company might see as encroaching upon their existing trademark rights. The assessment of confusion requires a fact-driven, contextual analysis; it is not something that is always apparent on the face of things.

Perhaps the anti-SLAPP provisions might have a greater role to play when there is better evidence either that the rights being asserted are dubious, or that they are being asserted in a vexatious manner. This might occur where the proceedings themselves are conducted in an abusive manner, or where there is evidence of the bad faith assertion of trademark rights that goes beyond the normal practice of protecting one’s interests. It might also occur in circumstances where the plaintiff has no valid cause of action. For example, the non-commercial, critical use of a trademark seems to fall outside the scope of the legislation (although such a use of a design mark might infringe copyright, which raises a different set of issues). Such a case would also raise the freedom of expression issues which seem to be identified as central to the bill which brought about the amendments to the Code of Civil Procedure.

On March 7, 2012, counsel for Tory cabinet Minister Vic Toews made an ex parte application for a court order that would compel the Registrar of the Manitoba Court of Queen’s bench to disclose any logs or requisition forms that would reveal the identities of anyone who had applied to view the files relating to Mr. Toews divorce proceedings. The application made reference to the fact that persons unknown had accessed the files, made copies of some of the documents, and posted them on the Internet. These acts had taken place during the so-called “Vikileaks” scandal; the person who disclosed the information was allegedly responding to the government’s lawful access bill before Parliament which critics have claimed could lead to unprecedented forms and levels of state surveillance of Canadians’ Internet activities. Mr. Toews had attracted a great deal of negative media attention leading up to the Vikileaks scandal when he publicly stated that a critic of the bill could either stand with the government or stand with the child pornographers.

The open courts principle in Canada means that not only the decisions of courts are available to the public, but that court hearings take place in public and that court records may also be consulted by members of the public. There are limits, of course. In appropriate circumstances courts may seal files, limit access to hearings, or place bans on the publication of all or some aspects of court proceedings. The person or persons who accessed the Toews divorce files were within their rights to do so.

The Justice Saull of the Manitoba Court of Queen’s bench granted the application and ordered the Registrar to disclose the information sought by counsel for Toews. This very troubling decision is brief, and offers no explanation of the basis for the order.

Ex parte proceedings are inherently non-adversarial; the opposing party, or the affected party, is not present to participate in the hearing or to provide their own perspective or arguments. In proceedings where an applicant (often seeking to launch a defamation suit) seeks a court order to compel disclosure of the identity of a person who has anonymously posted allegedly defamatory material about them on the Internet, courts have insisted that the applicant meet a stringent test in order to justify the violation of the privacy of the person engaged in the internet communications, and to justify compelling a third party to disclose information that they must otherwise keep in confidence. The elements of this test require the court to assess:

 

(i) Whether the applicant has provided evidence sufficient to raise a valid, bona fide or reasonable claim;

(ii) Whether the applicant has established a relationship with the third party from whom the information is sought such that it establishes that the third party is somehow involved in the acts complained of;

(iii) Whether the third party is the only practicable source of the information available;

(iv) Whether the third party can be indemnified for costs to which the third party may be exposed because of the disclosure, some [authorities] refer to the associated expenses of complying with the orders, while others speak of damages; and

(v) Whether the interests of justice favour the obtaining of the disclosure.

 

None of these elements appear to have been considered in this case. Significantly, the applicant did not even allege that any legal wrong, such as defamation, was committed. The brief merely stated that the applicant “had a vital interest in knowing who accessed his personal affairs and published them on the interest [sic] as “retribution” for his fulfilling his mandate as a member of Her Majesty’s government.”

The lack of reasons for the decision to order the release of the information is troubling not just because the issues are important and deserve some articulation. The lack of reasons could also be taken as an acceptance of the assertions advanced by the applicant. Among these is the assertion that “there can be no privacy interests in filing a requisition to view a public document. Nor can there be public policy reasons to provide anonymity to persons who do this.”

Both of these assertions deserve closer scrutiny, something which was not permitted by the ex parte nature of these proceedings. Although Manitoba’s Freedom of Information and Protection of Privacy Act does not apply to “information in a court record”, the names of individuals who have requested access to court documents from the Registrar do not constitute information in a court record. This is information collected by the Registrar regarding access to records under their custody. Under the FOIPP Act, a public body (here the Registrar) may only disclose the personal information it collects in limited circumstances. This would seem, from the outset, to counter the argument that there is no privacy interest in this information. The Registrar is a public body with an obligation to protect and limit disclosure of the personal information which it collects; citizens have an expectation that this obligation will be met in accordance with the terms of the law.

The assertion that there are no “public policy reasons to provide anonymity” to persons who file requisitions to view public documents is quite simply baseless. There is no question of anonymity; individuals are required to provide their name when they access the information. The name becomes part of a record maintained by the institution. The issue is whether other people have any entitlement to access this information. Keep in mind that this information is not about the court proceedings themselves and has nothing to do with the open courts principle. It is information about the personal or professional interest taken by individuals in different court proceedings. Quite apart from the Registrar’s obligation to protect the personal information which it collects from individuals in this manner, one might ask what public interest is served by making such lists presumptively public; and whether a greater public interest is served by protecting individuals from undue scrutiny about what they choose to read.

It would seem that the issue comes down to the same one that arises in Internet defamation suits: under what circumstances should a court order access to records in the hands of third parties in which there is a privacy interest. The test for a Norwich order sets some important guidelines in order to avoid abuse. Perhaps most significantly, it asks whether the applicant has provided sufficient evidence to establish that they have suffered a legal wrong for which they are seeking redress. In this case nothing in the applicant’s brief alleges a legal wrong has been committed, or that legal action is even contemplated by the applicant.

The result in this case is that a Minister of the Crown successfully persuaded a court in an ex parte application which featured no concrete legal arguments and provided no evidence of a legal wrong, to disclose the names of individuals who had sought access to public court records (something which we are all entitled to do under the open courts principle). Although the brief alleges that access to the divorce records had been sought by the unnamed individual for “retribution” against the Minister, the fact that the brief makes no argument about any actual legal proceedings in relation to which the names are sought itself raises the spectre of retribution. Although the issue is one that potentially affects all court records, in this case, the power imbalance between a Minister of the Crown and any citizens who may have chosen to access these records for their own purposes is quite stark. There are much bigger public policy issues at play here and the public interest was not well served by this court decision.

 

 

The Federal government launched a new open data initiative in March 2011. One year in, the pilot project is growing and evolving. The government has also integrated the open data portal within a broader open government initiative. This initiative has three main components: open data, open information and open dialogue. The initiative is important, and it brings Canada into line with similar initiatives already underway in comparable democracies such as the United Kingdom, the United States, Australia and New Zealand, to name just a few. Of course, the open government movement has taken hold elsewhere in Canada too. Notable initiatives are found at the provincial government level in B.C., and in major municipalities such as Vancouver, Toronto, Edmonton and Ottawa.

The open data part of open government sees governments providing data sets to the public, free of cost and of most restrictions. The idea is stimulate innovation (allowing application developers, for example, to develop innovative ways to make use of the information); to improve services to the public (for example, applications involving public transit data have been hugely popular to transit system users); to allow researchers better access to data for analysis and study; and to improve government transparency. To be truly effective, data must be provided in usable (machine readable) formats; standardization of formats is important if different data sets are to be combined.

In a country such as Canada which still clings to Crown copyright, and where both Federal and Provincial crowns have asserted rights to their data (notwithstanding that copyright does not protect facts, only the original selection or arrangement of facts), the licensing of government data through open data initiatives is important. (See my own article on copyright in fact based works here; and an excellent piece by Elizabeth Judge on access to and use of public sector information here). The default position has been for the government to assert its rights. Open data requires a major cultural shift. This is clearly something that is still in process at the federal level in Canada. A look at the licence currently (as of March 16, 2012) available through the open government portal reveals a licence that in theory lets go of the data, but that does so wrapped in excessively legalistic formulations.

An important element of interoperability of data sets is the compatibility of the licences under which they are granted. There are real advantages to open government licences that evolve along very similar lines. The U.K. government developed an open government license that has the virtue of being accessible and user-friendly, and that clearly conveys the message that the data is there to be used as freely as possible. This licence has been used as a template for B.C.’s open data licence. The Canadian government portal is a work in process; let’s hope that a new version of the licence will soon be forthcoming.

In its unanimous decision in Jones v. Tsige, 2012 ONCA 32, the Ontario Court of Appeal recognized at least one subset of a common law right of action for invasion of privacy. This subset, which the court calls the tort of “intrusion upon seclusion” is one of four privacy-related torts identified by U.S. law professor William L. Prosser in his article “Privacy”((1960), 48 Cal. L.R. 383 at 389), and adopted by the U.S. Restatement (Second of Torts) (2010). Its recognition in this case is described by Justice Sharpe as “an incremental step that is consistent with the role of this court to develop the common law in a manner consistent with the changing needs of society.”(at para 65).

Jones was the ex-spouse of Tsige’s current common law partner. Ostensibly out of a dispute with her partner, and questions about whether he was making child support payments, Jones began checking Tsige’s bank account information, to which she had access as an employee of Tsiges bank, the Bank of Montreal (BMO). The surreptitious checking of financial information occurred on at least 174 occasions over a 4 year period. After Jones voiced her suspicions to BMO, Tsige was confronted and admitted to the conduct and was disciplined by her employer. Jones brought a law suit against Tsige for invasion of privacy, seeking damages in the amount of $70,000 and punitive damages of $20,000. Her case was dismissed by summary judgment on the basis that there was no common law tort of invasion of privacy in Ontario. It was this decision which was appealed to the Court of Appeal.

The Court of Appeal outlined the four privacy-related torts identified by Prosser and adopted by the restatement:

 

1. Intrusion upon the plaintiff’s seclusion or solitude, or into his private affairs.

2. Public disclosure of embarrassing private facts about the plaintiff.

3. Publicity which places the plaintiff in a false light in the public eye.

4. Appropriation, for the defendant’s advantage, of the plaintiff’s name or likeness. (reproduced at para. 18 of the Court of Appeal decision).

 

Justice Sharpe, writing for the unanimous court, noted that the tort of misappropriation of personality was already recognized in Ontario. Rather than recognize a broad tort of invasion of privacy, he chose, on these facts, merely to address the more limited tort of intrusion upon seclusion. Justice Sharpe noted that, in the Restatement, the tort of intrusion upon seclusion “includes physical intrusions into private places as well as listening or looking, with or without mechanical aids, into the plaintiff’s private affairs.” (at para 20).

Justice Sharpe reviewed prior case law from Ontario and noted that other courts had awarded damages for wrongs that involved privacy dimensions without explicitly recognizing a tort of invasion of privacy per se, or had at least declined to dismiss actions for invasion of privacy on the basis that the disclosed no reasonable cause of action. He also canvassed Charter privacy jurisprudence, noting that this case law “identifies privacy as being worthy of constitutional protection and integral to an individual’s relationship with the rest of society and the state.” (at para 39). He noted that “the common law should be developed in a manner consistent with Charter values” (at para 46), and that such an approach would favour the recognition of a right of action for intrusion upon seclusion.

Justice Sharpe next considered the relevance of various pieces of privacy legislation. The court below had expressed the view that the Personal Information Protection and Electronic Documents Act (PIPEDA), provided recourse for persons in the plaintiff’s position, and thus supported the view that the recognition of a tort action was unnecessary. Justice Sharpe corrected this erroneous view, noting that PIPEDA dealt with the information practices of “organizations” engaged in commercial activity, and did not address the particular circumstances that arose in this case (or that might arise in many others). Unfortunately, his reasons were not as complete as they might be on this point, and contain some misapprehensions of the nature and scope of PIPEDA. For example, Justice Sharpe erroneously refers to PIPEDA as “dealing with “organizations” subject to federal jurisdiction and does not speak to the existence of a civil cause of action in the province.” (at para 50). PIPEDA’s scope of application is much broader than just federally-regulated organizations; for example, it applies to all organizations in Ontario that engaged in “commercial activity”. Justice Sharpe also indicates that another reason that recourse under PIPEDA does not suffice is that it does not give a right to damages. This is not true; sections 12 and 14 of PIPEDA give complainants the option of seeking damages before the Federal Court once they have received a report of findings from the Commissioner. But Justice Sharpe is directly on point when he notes that PIPEDA would only have given Jones recourse against BMO, and not against Tsige. This is extremely important; PIPEDA’s scope of application (to organizations engaged in commercial activity) and its express exclusion of application to domestic contexts or where individuals are acting for private purposes (where so many truly egregious violations of privacy occur) mean that PIPEDA is only a very selective data protection tool and not a broad recourse for privacy invasive conduct.

Justice Sharpe also canvasses the four existing provincial statutes that create causes of action for invasion of privacy, as well as case law in the U.S. and commonwealth jurisdictions before arriving at the principles that should guide the newly minted tort in Ontario. He noted that the evolving case law supports the recognition of the new tort, and cited academic authority in support of this view. He then noted the importance of technological change as a driver for the recognition of privacy rights. He observed that “[a]s the facts of this case indicate, routinely kept electronic data bases render our most personal financial information vulnerable.” (at para 67). Similarly, health information databases pose risks, as to the innumerable other digital records we leave in our wake as we carry out our daily activities. He stated: “It is within the capacity of the common law to evolve to respond to the problem posed by the routine collection and aggregation of highly personal information that is readily accessible in electronic form.” (at para 68).

According to Justice Sharpe, the facts before him “cry out for a remedy”. Noting that Tsige’s actions were deliberate and sustained, as well as “shocking”, he observed that “the law of this province would be sadly deficient if we were required to send Jones away without a legal remedy.” (at para 69). He distilled the elements of the tort from the U.S. Restatement and summarized them in these terms:

 

The key features of this cause of action are, first, that the defendant’s conduct must be intentional, within which I would include reckless; second that the defendant must have invaded, without lawful justification, the plaintiff’s private affairs or concerns; and third, that a reasonable person would regard the invasion as highly offensive causing distress, humiliation or anguish. (at para 71)

 

However, he cautioned that “given the intangible nature of the interest protected, damages for intrusion upon seclusion will ordinarily be measured by a modest conventional sum.” (at para 71).

Justice Sharpe seems concerned that the tort must be narrowly drawn so as not to open any floodgates of litigation. He cautions that a claim for intrusion upon seclusion “will arise only for deliberate and significant invasions of personal privacy.” (at para 72) He also warns that “Claims from individuals who are sensitive or unusually concerned about their privacy are excluded: it is only intrusions into matters such as one’s financial or health records, sexual practices and orientation, employment, diary or private correspondence that, viewed objectively on the reasonable person standard, can be described as highly offensive.” (at para 72) It is not clear that such an enumeration is ultimately helpful; while it does give some sense of the ambit of the tort he envisages, it may also lead overly cautious lower court judges to unduly restrain the parameters of a tort that may need to adapt and respond to our ever-shifting technological environment. Similarly, the standard of “highly offensive” is a tricky one, as is the perspective of the “reasonable” as opposed to the unusually privacy sensitive person.

Justice Sharpe is also sensitive to the need to balance privacy with other potentially competing interests, such as freedom of expression and freedom of the press. Thus, there is no absolute right of privacy, each case will require a contextual examination.

On the issue of damages, Justice Sharpe notes that it is not necessary to establish proof of loss (although it presumably would be open to a plaintiff to do so, had he or she incurred specific quantifiable losses associated with the invasive activity.) Where no proof of specific damages is advanced, Justice Sharpe, after an evaluation of damage awards in a series of cases, sets an upper limit of $20,000. He also distils the following criteria to provide guidance to courts in assessing where on the spectrum (from $0 to $20,000) a damage award should lie. A court should consider:

 

1. the nature, incidence and occasion of the defendant’s wrongful act;

2. the effect of the wrong on the plaintiff’s health, welfare, social, business or financial position;

3. any relationship, whether domestic or otherwise, between the parties;

4. any distress, annoyance or embarrassment suffered by the plaintiff arising from the wrong; and

5. the conduct of the parties both before and after the wrong, including any apology or offer of amends made by the defendant. (at para 87)

 

Aggravated or punitive damages awards are neither precluded nor encouraged, although Justice Sharpe notes that these would only be available in “exceptional cases calling for exceptional remedies.” (at para 88). On the facts before him, he settled on a damage award of $10,000, noting that although the actions were deliberate and repeated, the defendant had apologized and was genuinely remorseful. He also noted that she had not publicized the plaintiff’s financial information, and her actions caused no embarrassment or other public consequences. He declined to award punitive damages. Perhaps surprisingly, he did not award costs to either party, citing the novel issues raised by the case.

The globalized and decentralized Internet has become the new locus for a wide range of human activity, including commerce, crime, communications and cultural production. Activities which were once at the core of domestic jurisdiction have moved onto the Internet, and in doing so, have presented numerous challenges to the ability of states to exercise jurisdiction. In writing about these challenges, some scholars have characterized the Internet as a separate “space” and many refer to state jurisdiction over Internet activities as “extraterritorial”. Rob Currie and I have recently published an article in the Georgetown Journal of International Law that explores these challenges in the context of the overall international law of jurisdiction, rather than focusing on any one substantive area. We argue that while the Internet may push at the boundaries of traditional principles of jurisdiction in public international law, it has not supplanted them. We explore the principles of jurisdiction, including the evolving concept of “qualified territoriality”, and demonstrate how they continue to apply in the Internet context. We also examine how states exercise their authority with respect to Internet activities by addressing governance issues, by engaging in normative ordering for the Internet, and by extending the reach of their domestic laws to capture Internet-based activities. The article concludes by offering a set of “first principles,” in the form of policy precepts, to guide the evolution of public international law norms and to address problems particular to the context of the global Internet.  You can find it here: http://gjil.org/wp-content/uploads/archives/42.4/zsx00411001017.PDF.

A recent decision of the Supreme Court of Canada on the constitutionality of the proposed federal Securities Act raises interesting questions regarding the constitutionality of the Personal Information Protection and Electronic Documents Act (PIPEDA). PIPEDA was enacted by the federal government in 2000, and sets rules for private sector data protection that apply to all organizations engaged in commercial activity across the country. The authority of the federal government to enact such a law has generally been believed to be the general trade and commerce power under s. 91(2) of the Constitution Act, 1867. It is precisely the scope of this power that is considered by the Supreme Court of Canada in Re Securities Act, 2011 SCC 66.

The constitutionality of PIPEDA has been like a low-level background noise in the history of the statute. A reference case challenging its constitutionality was initiated and then shelved by the Quebec government in the early 2000’s. The issue rippled briefly to the surface in the recent decision in State Farm v. Privacy Commissioner of Canada, but the court avoided dealing with the question there. It remains to be seen whether the decision in Re Securities Act will be used to bolster challenges to PIPEDA at some point in the future.

The proposed Securities Act evolved from a history of proposals and recommendations for the development of a national securities regulator that dated back to 1935. All parties accepted that in general terms, the regulation of securities within provincial borders falls under provincial legislative competence over property and civil rights under s. 92(13) of the Constitution Act, 1867 and matters of a merely local or private nature under s. 92(16). This is borne out by the long-standing practice of provincial regulation of the securities trade in Canada.

The call for a national regulatory body that led to the proposed Securities Act (which was supported by the province of Ontario, but opposed by other provinces) arose out of concerns that there were certain national dimensions to the trade in securities that could only effectively be dealt with by national legislation. The provinces which opposed the proposed Securities Act disagreed, arguing that the Act was a thinly disguised attempt by the federal government to take over a matter that fell within provincial legislative competence. Those provinces which saw a role for a national securities regulator, nonetheless argued that any statute that established such a scheme would have to respect the division of powers and would have to evolve through federal-provincial co-operation, rather than by the unilateral imposition of a federal legislative scheme.

The Supreme Court observed that although the Constitution gives legislative competence over specific subject matter to one level of government or another, some issues may have dimensions that touch on matters that are within both federal and provincial jurisdiction. The “double aspect doctrine” allows each level of government to take jurisdiction over that aspect of the issue that falls within its legislative competence. The Court referred to this as an area where there is concurrent application of both federal and provincial laws, but not concurrent jurisdiction over the subject matter. Where such overlaps occur, the modern trend is towards “accommodating cooperative intergovernmental efforts.” The Court noted “an underlying constitutional principle that demands respect for the constitutional division of powers and the maintenance of a constitutional balance between federal and provincial powers.” (at para. 61)

The federal government argued that the proposed Securities Act fell within its power over trade and commerce under s. 91(2) of the Constitution Act, 1867. While normally this jurisdiction is limited to interprovincial and international commerce, courts have recognized a “general trade and commerce power” that is available in limited circumstances. The availability of this power is limited because, as the Court observed, it is “so broad that it has the potential to permit federal duplication (and, in cases of conflict, evisceration) of the provincial powers over large aspects of property and civil rights and local matters.” (at para 70) Thus, if not carefully constrained by the courts, this power might “upset the constitutional balance envisaged by ss. 91 and 92 and undermine the federalism principle.” (at para 70) According to the Court, laws enacted pursuant to the general trade and commerce power must be “qualitatively different from anything that could practically or constitutionally be enacted by the individual provinces either separately or in combination.”(at para 79) The power has been used to support federal constitutional jurisdiction over trademark law and competition law.

The Court distilled the following principle to govern the application of the general trade and commerce power: “Provided the law is part of a general regulatory scheme aimed at trade and commerce under oversight of a regulatory agency, it will fall under the general federal trade and commerce power if the matter regulated is genuinely national in importance and scope.” (at para 83) According to the Court”“To be genuinely national in importance and scope, it is not enough that the matter be replicated in all jurisdictions throughout the country. It must [....] be something that the provinces, acting either individually or in concert, could not effectively achieve.” (at para 83) For example, competition law, which is regulated by the federal government is not limited to a single industry or a single region of Canada. The effects of anti-competitive behaviour transcend provincial boundaries. Uneven regulation across the provinces, or even the failure of one province to regulate “would render the market vulnerable”. (at para 87)

The test for the general trade and commerce power applied by the Court was developed in General Motors of Canada v. City National Leasing, [1989] 1 S.C.R. 641. Once the pith and substance of the legislation is determined, the court must evaluate the following critieria:

 

(1) whether the impugned law is part of a general regulatory scheme; (2) whether the scheme is under the oversight of a regulatory agency; (3) whether the legislation is concerned with trade as a whole rather than with a particular industry; (4) whether it is of such a nature that provinces, acting alone or in concert, would be constitutionally incapable of enacting it; and (5) whether the legislative scheme is such that the failure to include one or more provinces or localities in the scheme would jeopardize its successful operation in other parts of the country. (General Motors, at pp. 661-662)

 

The Court characterized the proposed Securities Act as being in pith and substance “to implement a comprehensive Canadian regime for the regulation of securities with a view to investor protection, the promotion of fair, efficient and competitive capital markets and ensuring the integrity and stability of the financial system.” (at para 106) In doing so, the Act would “duplicate and displace the existing provincial and territorial securities regimes, replacing them with a new federal regulatory scheme.” (at para 106)

The Court found that the first two General Motors criteria were easily met. The law established a general regulatory scheme for securities and placed it under the oversight of a regulatory body. As to the third factor, the Court found that the Act was chiefly directed to “the day-to-day regulation of securities within the provinces.” (at para 116) Although some aspects of the Act might be directed towards broader national goals, the Court found that these elements “do not, on the record before us, justify a complete takeover of provincial regulation.” (at para 117) The Court rejected arguments that the “securities market has been so transformed as to make the day-to-day regulation of all aspects of trading in securities a matter of national concern.” (at para 117)

The fourth General Motors factor requires a consideration of whether the provinces could, acting in concert, enact a similar scheme. The Court noted that the provinces could certainly choose to work together to harmonize their statutes, and they also could choose, in concert, to delegate oversight functions to a single pan-Canadian regulator. Yet nothing required them to do so. Because of this, the fourth consideration weighed partly in favour of federal jurisdiction. Nevertheless, the Court noted that the proposed Act did not focus on only those elements which were beyond the reach of the provinces; rather it “reaches down into the detailed regulation of all aspects of securities”. (at para 122) The Court contrasted this with the constitutionally legitimate Competition Act, which does not regulate all commercial contracts, but rather only those which are anti-competitive. It found that the proposed securities legislation “overreaches the legislative interest of the federal government.” (at para 122)

The fifth consideration is whether the decision by a province not to participate in a collaborative scheme would prevent its effective operation. The Court noted that the Act contained an opt-in scheme for provincial participation. The possibility that the scheme could operate even with incomplete uptake by the provinces undermined any argument that it was necessary to avoid a situation where one or more provinces chose not to act.

The court ultimately concluded that the proposed Act could not be justified as falling within the general trade and commerce power. Essentially, the legislation strayed beyond matters of truly national concern and sought to regulate subject matter that has long been recognized as falling within provincial jurisdiction. The court concluded:

 

The need to prevent and respond to systemic risk may support federal legislation pertaining to the national problem raised by this phenomenon, but it does not alter the basic nature of securities regulation which, as shown, remains primarily focused on local concerns of protecting investors and ensuring the fairness of the markets through regulation of participants. Viewing the Act as a whole, as we must, these local concerns remain the main thrust of the legislation — its pith and substance. (at para 128)

The Court suggested that cooperation between federal and provincial governments could lead to a scheme that respects provincial jurisdiction while at the same time addressing matters of national concern.

The decision will clearly be relevant to any consideration of the constitutionality of PIPEDA. The protection of privacy and data protection in areas of provincial competence have long been considered matters falling within provincial jurisdiction under either s. 92(13) or 92(16) of the Constitution Act, 1867. Indeed, Quebec’s own private sector data protection legislation pre-dates PIPEDA, and there has never been any doubt that that statute was squarely within the province’s legislative authority. The fact that the Quebec statute has been declared “substantially similar” to PIPEDA does little to reinforce the constitutionality of the federal scheme, since it supports the view that the law goes beyond what is required to address matters of national importance and strays into those matters that the provinces, acting independently, could address. While the federal government clearly has the power to enact data protection laws that apply to federal works and undertakings, or that apply to interprovincial or international commercial activity, it is more difficult to justify the extension of the legislation to purely intraprovincial commercial activity. The constitutionality of PIPEDA in light of the decision in the Reference re Securities Act deserves (and will likely receive) much consideration.

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