The CRTC has initiated a public proceeding to show cause why certain telecommunications service providers should not have their telecommunications services disconnected, in light of their failure to become members of the agency responsible for handling subscriber complaints.

The Commissioner for Complaints for Telecommunications Services Inc. (CCTS) is an independent consumer agency tasked with resolving complaints from consumers and small businesses relating to retail telecommunications services for which the CRTC no longer requires a tariff. 

In its Notice of Consultation, the CRTC indicated that the telecommunications service providers (TSPs) that are the subject of the show cause proceeding were repeatedly contacted by both the CCTS and the Commission to remind them of their obligation to join the CCTS; however, none of the six companies has apparently responded to such notifications or otherwise come into compliance.  Interestingly, the CCTS’s own website indicates that it referred 9 companies to the CRTC for enforcement action, leaving one to speculate whether the other 3 did eventually respond to CRTC inquiries.

In addition to ordering the disconnection of any telecommunications services that the respondent TSPs might receive from other carriers of service providers, the Commission may also issue a mandatory order against the TSPs in question, requiring them to comply with their obligations under the Telecommunications Act.  Such an order may be registered with the Federal Court, where it may be enforced as if it were the Court’s own order.

Much-anticipated revisions to the originally proposed Electronic Commerce Protection Regulations provide some useful clarifications and additional exemptions with respect to Canada’s Anti-Spam Law (CASL), but many concerns remain with respect to the potential over-reach of the not-yet-in-force law and the unnecessary and burdensome financial and administrative obligations that it may impose on legitimate business activity.

In fact, while the revised Regulations do respond to some of the concerns raised with respect to the previously proposed regulations – and indeed, the Act as a whole - the new Regulations may be more notable for what they don’t include than for what they do cover. 

• Accepting as valid under CASL consents to the receipt of commercial electronic messages that are obtained in compliance with the federal private sector privacy law, the Personal Information Protection and Electronic Documents Act.  In the explanatory remarks accompanying the proposed Regulations, the Government explicitly indicates that CASL is intended to create a higher threshold for consent for the receipt of commercial electronic messages.
• Allowing Canadian businesses to send, on behalf of foreign organizations, commercial electronic messages to recipients outside of Canada.  Concerned with the potential for abuse by spammers, the Government rejected submissions that the lack of an exemption for such activity would put Canadian outsourcing and cloud computing firms at a significant disadvantage with respect to their foreign counterparts.
• Allowing manufacturers without a direct relationship with end users of their products (such as where the products are purchased from a retailer) to send commercial electronic messages to those end users.  The Government rejected an exemption for manufacturers as too broad, but as noted below, has created new exemptions with respect to sending warranty and recall information.
• Reducing the complexity of the requirements for the collection and withdrawal of consent for the receipt of commercial electronic messages sent by as-yet-unknown third parties.  The Regulations continue to require organizations collecting such consents on behalf of such third party organizations to engage in detailed tracking of such consents and take responsibility for the actions of such third parties.
• Expanding the “existing business relationship” exemption to include legitimate commercial electronic messages sent in the context of additional ongoing business relationships, which do not clearly fall within the narrow definition of the current exemption.

Nevertheless, the revised regulations do provide some clarification of key legislative terms, as well as new exemptions for business activities that were not intended to be within the scope of CASL.  Moreover, the Government has indicated that Industry Canada and the CRTC are exploring the use of interpretational guidelines and other guidance material to provide clarity where appropriate.

Virtual Friends

One such clarification is that the revised Regulations amend the previous definition of “personal relationship” so as to correct what many argued was an unduly narrow exemption from the anti-spam requirements for commercial electronic messages sent between individuals.

CASL provides that its core anti-spam provision does not apply to commercial electronic messages that are sent by an individual to another individual with whom they have a “personal or family relationship.”  However, in the original regulations proposed by Industry Canada, the term “personal relationship” was defined so as to recognize only those relationships where the individuals concerned had actually met face-to-face within the previous 2 years.

The revised Regulations exempt commercial electronic messages sent between individuals who have had direct, voluntary two-way communications, in circumstances where it would be reasonable to conclude that the relationship is personal.  In reaching such a conclusion, all relevant factors are to be considered, including the nature and frequency of such communications, the length of time over which the parties have communicated and whether the parties have met in person.  The two-year limitation period has been removed.  Recipients of exempted “personal relationship” messages may opt-out of receipt of such messages, in which case the exemption no longer applies.

The exemption may be most relevant for businesses where they may facilitate or encourage customers to send commercial electronic messages to their personal networks, such as through “forward to a friend” features.

B2B Exemptions

One of the chief criticisms of the earlier regulations, and of CASL as a whole, has been that the since the definition of “commercial electronic message” is so broad, the Act could impose unnecessary consent and disclosure requirements on regular business communications that should not be within the scope of the law.

In response, the revised Regulations introduce new exemptions for commercial electronic messages sent within a business, or sent between businesses that are already in a business relationship, where the messages are sent by employees, representatives, contractors or franchisee and the message concerns the organization or the individual recipient’s role, functions or duties within or on behalf of the organization.

Messages in Response

Again, due to the broad definition of “commercial electronic message”, concerns were raised that businesses responding to inquiries could be caught by the anti-spam law.  While CASL includes an exemption for individuals contacting an organization to inquire about its business, there was no corresponding exemption with respect to the organization’s response.

Accordingly, the revised regulations include a new exemption for commercial electronic messages that are sent in response to a request, inquiry or complaint, or that is otherwise solicited by the recipient.

Incidentally in Canada

One of the key concerns of many foreign companies was that CASL applies to commercial electronic messages that are either sent from or accessed through a computer system located in Canada.  Accordingly, concerns arose about the potential application of the law to commercial electronic messages sent from outside Canada, to recipients who are ordinarily resident outside Canada, but who may access such messages during visits to Canada.

A new provision in the revised Regulations appears to largely satisfy this concern, by exempting such messages, provided that they relate to a product, good, service or organization located or provided outside Canada, and that the sender did not know and could not reasonably be expected to know that the message would be accessed using a computer system located in Canada.  However, uncertainties still remain, for example with respect to the treatment of a non-Canadian sender who also makes the product or service in question available through a Canadian subsidiary or affiliate.

Non-Transactional Business Communications

The revised Regulations also include a new provision exempting commercial electronic messages sent for purposes relating to the satisfaction, notification or enforcement of legal or juridical rights and obligations, such as sending warranty or recall information, electronic bank statements, notices of copyright infringement, etc..  Again, such an explicit exemption was considered necessary by some in view of the broad definition of commercial electronic message found in the Act.

Referral Messages

The revised Regulations contain a new exemption for commercial electronic messages sent based on a referral by one or more individuals, where such individuals have an existing business or non-business relationship or a personal or family relationship with the sender and the recipient.  The exemption applies only to the first commercial electronic message sent to contact the recipient, and the message must disclose the full name of the referring individual or individuals.  Several stakeholders had previously expressed concern that without such an exemption, they could not directly act upon referrals from friends, family and clients without first obtaining consent.

Telecom Service Provider Software

Finally, the revised regulations add two types of telecom service provider (TSP) software to the list of specified computer programs (such as HTML code, Java scripts, cookies, etc.), for which express consent is assumed if the individual’s conduct leads to a reasonable belief that they consent to such an installation.  The new exemptions relate to TSP programs to prevent unauthorized or fraudulent use of a service or system, or to update or upgrade systems on their networks.

Next Steps

While passed into law in December 2010, CASL has yet to be proclaimed in force, in part because the Government was awaiting the finalization of two sets of regulations: one to be made by Industry Canada, and one to be made by the CRTC.  The Electronic Commerce Protection Regulations (CRTC) were finalized last year, and the CRTC has issued two interpretation bulletins to provide guidance as to how it intends to apply those Regulations.

The proposed revisions to the remaining Electronic Commerce Protection Regulations were officially published for comment on January 5^th, 2013, starting CASL on the final leg of its long journey to coming into force.  Following a 30 day comment period, it is expected that the Regulations will be finalized, and a date will be announced for the coming into force of the new anti-spam regime.

The CRTC has refused a request by Globalive Wireless Management Corp. (operating as Wind Mobile) to initiate a review of the ownership structure of TELUS Corporation (TELUS Corp.) and TELUS Communications Inc. (TCI) in order to determine whether they might be operating in contravention of Canadian ownership rules.

Wind Mobile had suggested that approximately 48% of the beneficial holders of the voting shares of TELUS Corporation were located outside of Canada, and submitted that this provided compelling evidence that TELUS Corp. had exceeded the maximum 33 1/3% non-Canadian voting interests permitted for a carrier holding company by the Canadian ownership requirements, which are set out in the regime created by the Telecommunications Act and the Canadian Telecommunications Common Carrier Ownership and Control Regulations (the Regulations).

In denying the application, the Commission found that there was insufficient evidence of non-compliance on the record of the proceeding to warrant a review of the ownership of TELUS Communications Corp (TCC) (a partnership that is ultimately owned by publicly traded TELUS Corp.), which is the TELUS entity that is registered with the CRTC as a Canadian carrier.  

In support of its application, Wind Mobile had provided reports by Broadridge Financial Solutions Inc., an independent investor communications services company, which provided a geographic breakdown of what the applicant characterized as virtually all beneficial holders of TELUS Corp. voting and non-voting shares, categorizing such shareholders on the basis of the shareholder’s addresses, as maintained by their financial intermediaries. The Commission noted that the reports often reflected address information provided by intermediaries, rather than the residential addresses of beneficial shareholders, and that both Wind Mobile and TELUS acknowledged that the reports did not accurately reflect TELUS’s current outstanding share capital.

The CRTC also found that Wind Mobile had failed to demonstrate that TELUS’s board of directors had any reason to question the information it had received pursuant to the procedures set out in the Regulations.  In this regard, the CRTC noted that the Canadian ownership and control regime places the onus on carriers to remain in compliance, also requiring that each carriers file an annual report with the Commission that includes a statement respecting the percentage of voting shares beneficially owned and controlled by Canadians, as well as an affidavit or declaration affirming that the carrier continues to be in compliance with Canadian ownership requirements.  The Commission further noted that the Regulations provide detailed instructions to assist carriers and ensure compliance with the ownership rules.  The CRTC explicitly found that TELUS’s mechanisms for ensuring compliance are consistent with the provisions and requirements of the Regulations.

Readers of Canadian Communications Law will recall that, when originally licensed, Wind Mobile was itself the subject of an intensive CRTC review of its ownership and control structure, which found that Wind Mobile was not in compliance with Canadian ownership requirements, and therefore ineligible to operate as a telecommunications common carrier -- although Industry Canada, which granted radio spectrum licences to Wind Mobile, had earlier found that the company was compliant.  That CRTC decision was overturned by the federal cabinet, allowing Wind Mobile to commence operations; but the cabinet decision was itself quashed by the Federal Court.  Then the Federal Court of Appeal restored the cabinet decision.   The Supreme Court of Canada refused leave to hear a further appeal.

Although the date on which Canada’s Anti-Spam Legislation (CASL) may come into force is uncertain, the CRTC has issued two bulletins that provide guidance as to how to comply with the new law, once proclaimed in force.

But while some of the new guidance is helpful, other provisions will likely create significant operational concerns for businesses.

The Commission is the body charged with oversight and enforcement of most provisions of the new law, including the core provisions respecting commercial electronic messages (CEMs), alteration of transmission data and the installation of computer programs.  In addition, the CRTC has the power to make regulations under the Act with respect to certain matters.

The first of the new Compliance and Enforcement Bulletins provides further, and in some cases helpful, guidance on the interpretation of these Regulations, such as providing details on acceptable unsubscribe mechanisms for each of email and SMS messages, including visual mock-ups of acceptable approaches.

However, the Bulletin also indicates that the Commission considers that, where included in general terms and conditions of use or sale of a product or service, requests to send commercial electronic messages, alter transmission data or download computer programs must be obtained through separate positive affirmations of the user, such as the proactive checking of a tick-box to signify consent to each of these actions, in addition to the acceptance of other contractual terms or an organization’s privacy policy. 

Most problematically, in a second Compliance and Enforcement Bulletin, the CRTC seems to be ruling out default settings that favour consent, even where the user can uncheck a box to exercise their choice (a process that the Commission refers to as “toggling”) and where the user does provide a positive affirmation to a set of terms or an agreement.  The following example, included in the Bulletin, shows that even where the pre-checked box and related consent is featured prominently, and is adjacent to a button that the user must pressed to signify agreement to a contract, the CRTC will not consider this to be valid consent to the receipt of CEMs under the anti-spam law.

Another area of likely concern for businesses relates to CRTC guidelines respecting the collection of oral consent, a form of consent which is explicitly authorized by the Electronic Commerce Protection Regulations (CRTC).  The Bulletin suggests that in order to be able to discharge the onus of proving that it obtained oral consent, a business would have to have that consent verified by an independent third party or retain a complete and unedited audio recording of the consent.

We would note that, while these methods may work where consent is collected by telephone, through a call centre, they would create significant operational problems where consent is collected during a face-to-face interaction, such as might commonly occur at point of sale.

While the Bulletins do not have the force of law, they do provide a clear indication of how the CRTC will interpret the law and regulations that is charged to enforce.

In a shift from its largely hands-off approach to the regulation of wireless services, the Canadian Radio-television and Telecommunications Commission (CRTC) has announced that it will develop a mandatory code to address the clarity and content of mobile wireless services contracts and related issues -- but will continue not to regulate the rates for such services.

In its reasons for instituting such a code, the Commission cited consumer concerns and complaints about the terms under which mobile wireless services are offered in Canada, as well as near unanimity from consumer groups and wireless service providers as to the need for such a code.

In the public proceeding to develop the new code, which will include a public hearing to be held commencing 28 January 2012, the CRTC is seeking detailed comments with respect to the content of such a code, the service providers to which it should apply, the manner in which its terms should be enforced and promoted and how its effectiveness should be measured.  With respect to the content of the code, the Commission expressed the preliminary view that it should contain provisions respecting the following:

• Clarity of terms and conditions, including plain language drafting and requirements to provide contracts to customers
• How and when a service provider may amend the terms
• How and when a contract may be terminated, including the calculation and application of cancellation fees and conditions for automatic renewal
• Clarity of advertised pricing and a prohibition on charging for optional services that a consumer has not ordered
• Equal application to bundled and standalone services
• Requirements for notification of additional fees, such as where usage caps are exceeded
• Effect of loss or theft of hardware on contract and service charges
• Conditions under which security deposits may be requested
• Conditions for disconnection of service

While the proposed wireless code will mean Canadian consumers may see some changes to the terms of their wireless service contracts, there will be no rate changes required by the regulator.

In the mid-1990s, the CRTC determined that it would exercise its authority under the Telecommunications Act to forbear from regulating most aspects of the wireless industry, including retail rates and most contractual terms, thereby allowing market forces to achieve telecommunications policy objectives, including protecting the interests of consumer. 

Many of the consumers who provided comments in the proceeding to consider whether the CRTC should create a wireless consumer code expressed concern about the competitiveness of the Canadian wireless market, including choice of provider and pricing, and urged the Commission to reregulate in these areas.  However, the CRTC declined to intervene, noting that there is no evidence that the conditions for forbearance have changed sufficiently to warrant regulatory intervention with respect to mobile wireless service rates or competitiveness in the mobile wireless market, and finding that competition continues to be sufficient to protect the interests of users in these areas. 

As a final note, in developing the new consumer code, and attempting to establish a uniform approach to wireless service contracts across the country, the CRTC may face particular challenges trying to line up the terms of the code with the requirements of existing provincial legislation.  In this regard, the Province of Québec, which made changes to its Consumer Protection Act in 2010 that address wireless contracts, indicated in its submission to the CRTC that regardless of what the CRTC decides, it will maintain and enforce its existing legislation, asserting what it sees as its exclusive constitutional jurisdiction over matters of property and civil rights.

Under section 19 of the Copyright Act, performers and makers of sound recordings are entitled to remuneration when their recordings are performed or telecommunicated to the public. However, the section 2 definition of “sound recording” excludes a “soundtrack of a cinematographic work where it accompanies the cinematographic work.” “Soundtrack” is not defined, but the appellants had argued that it means the whole aggregate of sounds accompanying the film, and not the individual pre-existing sound recordings incorporated into the soundtrack. They contended, therefore, that royalties should be collected when those recordings are broadcast as part of a film’s soundtrack.

The Court rejected the appellants’ arguments that the Copyright Board’s decision is incompatible with Canada’s obligations under the Rome Convention, pointing out that the Rome Convention contemplates only protection of “exclusively aural fixation of sounds.” The Court also discounted the precedential value of Australian and U.K. jurisprudence because of significant differences in wording between Canadian and foreign copyright laws.

Online music previews are short extracts of musical works and assist a consumer in deciding musical purchases. The Copyright Board concluded that those who make previews available, and the users that listen to previews, were entitled to avail themselves of the fair dealing exception under section 29 of the Copyright Act, as listening to the previews constituted research of a purchasing decision (see our previous post). The Federal Court of Appeal upheld the Copyright Board’s decision and SOCAN sought leave to appeal to the Supreme Court of Canada.

In upholding the decisions below, the Supreme Court concluded that the previews constituted fair dealing, applying the test articulated by the Court in CCH Canadian Ltd v. Law Society of Canada (CCH).

The second step of the test required determining whether the use of the previews was “fair” in accordance with the six CCH factors: (i) the purpose, (ii) character and (iii) amount of the dealing, (iv) the existence of any alternatives to the dealing, (v) the nature of the work, and (vi) the effect of the dealing on the work. The Court concluded that: (i) the main purpose to provide previews was to facilitate the consumer’s research purposes; (ii) the previews were streamed and not downloaded, after listening, the preview was automatically deleted from the user’s computer, and copies could not be duplicated or further disseminated; (iii) regarding the quantity, the Court confirmed the “amount” meant the “quantity of the work taken”, the proportion of the excerpt used in relation to the whole work; (iv) previews were found to be reasonably necessary to help consumers research what to purchase since there were no other reasonable alternatives that could effectively preview the musical work; (v) previews were also necessary in disseminating the work because dissemination required a consumer to be able to locate and identify a work he or she wanted to buy; (vi) since the previews served to increase the sale of the work, they could not be said to be in competition with it, and thus the dealing did not adversely affect the work.

Just before recessing for the summer, Parliament passed amendments to the Telecommunications Act that removed foreign ownership requirements for all but the largest Canadian telecommunications carriers.

As we noted previously, the amendments in question provide that Canadian ownership rules will no longer apply to a telecommunications common carrier if the carrier and all its affiliates have total annual telecommunications revenues that represent less than 10% of total Canadian telecommunications revenues, as determined by the CRTC.  

Current rules limit foreign ownership in telecommunications carriers to an effective maximum of 46.7%, reflecting combined maximum allowable interests at the operating and holding company levels.  These rules remain in place for larger carriers.  Similar rules also continue to apply to broadcasting undertakings licensed under the Broadcasting Act.

The amendments to the Telecommunications Act were included in Bill C-38, the Jobs, Growth and Long-term Prosperity Act, the 425-page omnibus budget bill, which was passed by the Senate on the afternoon of June 29^th, receiving Royal Assent and coming into force that same day.

The Supreme Court of Canada has refused to hear an appeal relating to the scope of the authority of the federal cabinet to overturn a CRTC decision concerning whether a telecommunications carrier has met Canadian ownership obligations.

In doing so, the Court has essentially affirmed the eligibility of wireless new entrant Wind Mobile to operate, as well as implicitly endorsed the authority of the federal cabinet to take into account broad policy questions in determining whether to overturn CRTC decisions.

The Telecommunications Act provides that telecommunications common carriers must meet Canadian ownership requirements to be eligible to operate in Canada. In order to be so eligible, at least 80% of the members of a corporation’s board must be Canadian, at least 80% of its voting shares must be held by Canadians and the corporation may not be otherwise controlled by non-Canadians. Each of the CRTC’s decision and the subsequent variances and appeals focused on Globalive’s compliance with the latter criterion.

Next, the federal cabinet disagreed with the CRTC and varied the regulator’s decision, finding that the record did not support the conclusion that the company was controlled by a non-Canadian, and suggesting that the Canadian ownership and control requirements “should be interpreted in a way that ensures that access to foreign capital, technology and experience is encouraged.”

The federal cabinet (formally, the Governor in Council) is empowered by s. 12 of the Telecommunications Act to vary, rescind or refer back for reconsideration any CRTC decisions under that Act, although the section provides no guidance on the factors to be taken into account by the cabinet in making such a decision.

Then, Public Mobile Inc., another new wireless entrant, brought an application for judicial review of the cabinet decision.  In the case of Public Mobile v. Attorney General of Canada et al., the Federal Court, Trial Division granted the application and quashed the cabinet decision.

In Globalive Wireless Management Corp. v. Public Mobile Inc. the Trial Division decision was subsequently overturned by the Federal Court of Appeal, which rejected the errors of law identified by the lower court.  We discussed this case in more detail in a previous post.

The Supreme Court’s refusal to hear a further appeal means last year’s Federal Court of Appeal decision will continue to stand, and that all avenues for appeal or variance have been exhausted.

Ironically, on the same day that the Supreme Court issued its denial of leave to appeal, Parliament introduced proposed amendments to the Telecommunications Act, which would exempt smaller telecommunications carriers like Wind Mobile from the obligation to comply with Canadian ownership requirements, rendering moot the original impetus for the cabinet variance and judicial consideration of the last 3 years. 

With the introduction of the federal government’s latest budget bill, Canada is a step closer to lifting foreign ownership restrictions for some telecommunications providers.

In mid-March, the Minister of Industry announced planned changes to the current foreign ownership restrictions that are intended to provide greater access to capital and expertise for new entrants and smaller telecommunications carriers.  Last week’s budget bill, which amends over 50 statutes, contains amendments to the Telecommunications Act that are designed to put these changes to the Canadian ownership rules into effect.

Based on the most recent Communications Monitoring Report, in which total Canadian telecommunications revenues for 2010 were reported at $41.7 billion, this means that telecommunications common carriers with annual revenues from telecommunications services of less than $4.2 billion will not be required to meet Canadian ownership requirements.

If a carrier that was eligible to operate without meeting Canadian ownership requirement exceeds the 10% threshold through internal growth, they will continue to be unaffected by Canadian ownership rules; however, those that exceed the threshold due to the acquisition of control of another carrier, or the acquisition of the assets of another carrier will become subject to ownership requirements.  In fact, the amendments contain a new requirement that telecommunications carriers with less than 10% of total Canadian telecommunications revenues must notify the CRTC when it acquires control of another carrier or acquires assets used by a carrier to provide telecommunications services.

The amendments would also introduce a number of new definitions to the Telecommunications Act.

One of the more notable new definitions fixes a current feature in the Act which provides that only corporations can be eligible to operate as Canadian carriers.  Over the years, this limitation has provided some challenges of interpretation with respect to other forms of business associations, such as partnerships, where the Commission has found that in order to be eligible to operate, each partner in a partnership must be a corporation that meets Canadian ownership and control requirements.

The proposed amendments to the Telecommunications Act would add a new definition of an “entity,” which would encompass not only corporations, but also to partnerships, trusts and joint ventures, each of which would now be eligible to operate in Canada, provided that they meet any applicable ownership requirements.  The requisite level of ownership and control for non-corporations would be determined based on the “voting interest” in a partnership, trust or joint venture, being the ownership interest in the assets of the business that entitles the owner to receive a share of the profits and to share in the assets upon dissolution.  At the operating company level, at least 80% of such voting interests would have to be beneficially owned by Canadians.

Other proposed amendments to the Act relate to telemarketing rules and the National Do Not Call List, giving the CRTC the explicit power to conduct investigations to determine whether there has been a contravention of any order made by the Commission with respect to its telemarketing rules, and clarifying the Commission’s power to set fees for the use of the National Do Not Call list and similar databases.

Since it is contained in the budget bill of a majority government, it is expected that these amendments will be passed in the coming weeks.

In an unusual development, the CRTC has initiated a proceeding that may lead to possible re-regulation of the terms and conditions for the provision of wireless services to consumers.  Even more surprisingly, the proceeding is in part the result of an application by a wireless service provider that requested that the Commission step in to regulate some aspects of currently deregulated wireless services.

In its Notice of Consultation, the Commission is first seeking comments on whether the conditions for forbearance have changed sufficiently to warrant CRTC intervention in the development of a national retail wireless services code.

 Since the first licensing of wireless service providers in the early 90’s, the CRTC has been of the view that the wireless market was sufficiently competitive to protect the interests of users with respect to almost all aspects of wireless service.

However, two recent applications have requested that the Commission regulate some of the terms under which wireless services are offered by consumers.  One application seeking CRTC intervention was from consumer groups; however the other actually originated from a wireless provider, and was supported by other members of the wireless industry.

Faced in recent years with new consumer protection laws in a number of provinces which directly or indirectly impact wireless services, such as Québec and Manitoba, some wireless providers are seeking a single national consumer code that would provide uniform obligations across Canada.

Comments as to whether it is appropriate for the CRTC to become involved in the development of such a consumer code are due by 3 May 2012.

In an unprecedented “sting” operation, the CRTC has reprimanded 85 telemarketers for a range of violations of the Unsolicited Telecommunications Rules, which include the rules respecting Canada’s National Do Not Call List.

The enforcement action follows a five-month investigation, and appears to be the latest salvo in the Commission’s “get tough” approach to violators of the telemarketing rules.  However, rather than the attention-getting million dollar fines levied in recent years against some major telephone companies, the latest wave of enforcement focused more on the small business community.

Violations also included the use of “robo calls” for the purpose of solicitation, which is prohibited under the Commission’s rules.

As part of its mandate, the CRTC receives complaints and conducts investigations of alleged non-compliance with the Unsolicited Telecommunications Rules.  It is authorized by the Telecommunications Act to impose administrative monetary penalties on violators of up to $1,5000 for and individual and $15,000 for a corporation, for each violation.

Last year, the Commission also stepped up its efforts against foreign telemarketers calling into Canada, first reaching an agreement with two Mexican companies related to non-compliant telemarketing activity, then announcing the creation of an International Do Not Call Network to facilitate international cooperation on telemarketing enforcement initiatives. 

Following the registration, three weeks ago, of its new anti-spam regulations, the CRTC has issued a regulatory policy explaining the changes made to the draft regulations that it had originally proposed, as well as providing some guidance as to how some of the requirements will be interpreted.

In Telecom Regulatory Policy CRTC 2012-183, issued to coincide with the publication of the Electronic Commerce Protection Regulations (CRTC) in the Canada Gazette, the Commission notes that many of the changes to the originally proposed version of the Regulations were made in response to public comments, and in most cases were amendments intended to be less prescriptive and more technology neutral.

Perhaps most significantly, the Commission explicitly indicates in the Regulatory Policy that consent obtained “in writing” includes electronic forms of consent, putting to rest one of the more significant concerns of companies operating over the internet.  In other contexts, the Commission has accepted electronic forms of consent where a user signifies agreement through some positive action, such as clicking on an “I agree” box.

Although in their final form, the Regulations are not yet in force.  They will come into force on the day on which the core sections of Canada’s Anti-Spam Law come into force, which is expected to occur later this year.

Final regulations made by the CRTC under Canada’s Anti-Spam Law (CASL) include a number of revisions that respond to concerns raised by Canadian businesses; but while some additional flexibility has been provided, the Commission appears to have left a number of other concerns unanswered.

On 7 March 2012, the CRTC registered its Electronic Commerce Protection Regulations (CRTC), a final version of draft regulations that were originally proposed in June 2011.  Those regulations, and the related Electronic Commerce Protection Regulations that were proposed by Industry Canada, attracted significant criticism from the business community, which expressed concern that the regulations omitted some important clarifications of the requirements of the law, failed to provide exemptions for certain business and behaviours that should not be caught by the legislation and imposed unworkable and unnecessary requirements that may have had a disproportionate impact on technologies such as text messaging. 

The final Regulations include the following changes from those originally proposed:

• Clarification that persons sending a message, or persons on whose behalf a message is sent, must identify themselves by the name by which they carry on business.
• Greater choice with respect to the contact information to be provided.  Senders, and those seeking consent to send messages, may now provide either a telephone number providing access to an agent or a voice messaging system, an email address or a web address.  The original proposal seemed to require the provision of all of these, as well as a physical address.
• Revised requirements that web-based information be “readily accessible” and that the required unsubscribe mechanism must “be able to be readily performed.” The original proposed Regulations specified these requirements with reference to a maximum number of “clicks.”
• The revised Regulations now indicate that consent for the receipt of a commercial electronic message may be obtained orally, as well as in writing, as the original proposed regulations provided; however, the Regulations do not provide certainty as to whether electronic forms of consent will be considered to be “in writing,” which was the chief concern of many stakeholders with this requirement. See our earlier post for a discussion of this issue.
• The Regulations still require that when seeking consent, requestors must include a statement indicating that consent can be withdrawn, but no longer requires the requestor to specify through which avenues such a withdrawal of consent could be made.

The publishing of the CRTC Regulations puts the country one step closer to CASL being proclaimed in force.  The other shoes to drop include finalization of the Industry Canada Regulations (a revised version of which is expected to be published in the near future) and the selection of a vendor to run the Spam Reporting Centre contemplated by the Act.

The past year has seen many important developments in the area of Canadian communications law, and we have blogged about many of them here.

In several cases, the key developments have stemmed from ongoing trends in the industry, especially those relating to technology and industry consolidation.  If there is one unifying theme for the key legal and policy changes in 2011, it would be that many of them stem from the continuing disruptive effect of broadband internet services and digital technology on both the existing business models for broadcasting and telecommunications and the regimes under which those industries have been regulated.  Several courts began considering, or issued judgement in cases that explore the intersections between the laws respecting, broadcasting, telecommunications and copyright.

Here are our picks for the most significant communications law developments of 2011:

In March, the Supreme Court of Canada granted leave to hear an appeal from a 2010 judgement of the Federal Court of Appeal, which found that Internet Service Providers (ISPs) do not carry on “broadcasting undertakings”, within the meaning of the Broadcasting Act, when they provide access through the Internet to broadcasting material requested by users.  The case, which addresses the intersection of the legal regimes for broadcasting and telecommunications, was initiated by a Reference Order issued by the CRTC to resolve fundamental questions about the Commission’s authority over ISPs with respect to broadcasting content delivered over the internet.

The appeal is scheduled to be heard on January 16, 2012.  Fingers are crossed on both sides of the debate.

2.      Value for Signal Reference to be heard by Supreme Court

In September, the Supreme Court granted leave to hear an appeal from yet another jurisdictional reference put forward by the CRTC – this time respecting the Commission’s authority under the Broadcasting Act to establish a “Value for Signal” (VFS) regime under which broadcasting distribution undertakings (BDUs) might be required to pay local broadcasters a fee to distribute their programming services within the serving areas where the broadcast signals are receivable off-air.  Among other things, the case raises significant issues about the intersection between broadcasting and copyright laws and policy.

No date has yet been set for the hearing of the appeal, but as we noted in our earlier post, much will have changed since the CRTC originally endorsed the concept of VFS.

3.      The Continuing Saga of Foreign Ownership

One of the most controversial and divisive issues in Canadian communications policy continues to be the question of the appropriate approach to ownership restrictions on broadcasting and telecommunications undertakings operating in Canada.  In this regard, 2011 was notable as much for what didn’t happen as for what did. 

The past year saw not one, but two, judgements broadly relating to the compliance of new wireless entrant Globalive Wireless Management Corp. (Globalive) with existing foreign ownership restrictions in the Telecommunications Act and related regulations.  By way of background, in 2009, the CRTC, exercising its authority under the Telecommunications Act, and the Minister of Industry, exercising his authority under the Radiocommunication Act, came to different conclusions with respect to whether Globalive complied with the ownership restrictions: the Minister said “yes,” but the Commission said “no.”  Subsequently, the federal cabinet overturned the CRTC decision.

Following an application for judicial review, in March 2011 the Trial Division of the Federal Court quashed the cabinet decision that overturned the CRTC’s decision, finding that the cabinet had misdirected itself at law.  Subsequently, in June of this year, the Federal Court of Appeal overturned the lower court’s decision, restoring the cabinet order and effectively confirming the ability of Globalive to both hold spectrum licences and operate as a telecommunications common carrier.  An application for leave to appeal that Court of Appeal decision to the Supreme Court of Canada was filed in September, but the matter is still pending.

Meanwhile, the past year was also notable for the continuing silence of the Government with respect to its intentions for the potential reform of existing ownership restrictions.  Back in June 2010, the Government had proposed and sought public comments on 3 options for foreign ownership reform, one of which was the elimination of foreign ownership rules for telecommunications carriers.  The previous Minister of Industry had indicated that any changes to the rules would be considered in the context of the upcoming 700 MHz spectrum auction, scheduled for 2012.  There was even much speculation that the current Minister would be making an announcement about foreign ownership reform at an Ottawa conference at the end of November, but instead, the Minister indicated that the Government had yet to reach a decision on reform.

4.      New Vertical Integration Rules

In September, the CRTC released a new regulatory framework to deal with vertical integration among broadcasters and broadcasting distribution undertakings.  The new framework, which followed CRTC approvals of two recent transactions that transferred effective control of major private broadcasting networks to ownership groups that controlled major distribution undertakings, imposed several significant new restrictions on vertically integrated companies.

Among the most contentious of these new restrictions, the Commission imposed a new rule prohibiting new media broadcasting undertakings from offering programming designed primarily for television on an exclusive or otherwise preferential basis, where availability is dependent on a consumer’s subscription to a particular mobile or retail Internet service.  The Commission indicated that it would revise the New Media Exemption Order to include the new restriction.

In December, the Commission initiated public processes to amend both the New Media Exemption Order and the Broadcasting Distribution Regulations to reflect the new rules stemming from the Vertical integration decision.

That same month, the Commission issued its decision on an earlier complaint by TELUS Communications Company against Bell Mobility, finding that Bell Mobility gave itself an undue preference and subjected TELUS to an undue disadvantage when it secured exclusive programming rights for certain NHL and NFL games for its mobile platform, despite Bell Mobility’s argument that its arrangement with the leagues did not allow it to sub-licence the programming in question.  The decision was actually made under the existing 2009 New Media Exemption Order, which many felt did not prohibit the provision of exclusive content on competitive, non-legacy platforms.  The Commission’s decision would have been the same under the new rule, which is more clearly restrictive of exclusive content on mobile platforms.

5.      “Over-the-Top” Still Off the Table

In another “convergence” related decision, the CRTC indicated in October that it has no immediate plans to impose broadcasting regulatory obligations on “over-the-top” (OTT) providers of internet-delivered content, but will continue to monitor the issue.  The decision followed a public proceeding in which interested parties were invited to submit comments on the implications of OTT services for regulated broadcasters.  The CRTC had been under pressure from a number of stakeholders to examine the potential impact of the growing use of services like “Netflix” and the potential impact on the Canadian broadcasting environment.

6.      Anti-Spam Regulations

Canada’s Anti-Spam Legislation (CASL), as the new anti-spam law is unofficially known, was passed in late 2010, but has yet to be proclaimed in force.  In part, that proclamation has been awaiting the finalization of 2 sets of draft regulations, both of which were introduced in the summer of 2011 – and hit snags in the fall of this year.

In June, the CRTC issued the proposed Electronic Commerce Protection Regulations (CRTC) for comment.  In July, Industry Canada issued its own Electronic Commerce Protection Regulations, and in August, the government launched a new “Fight Spam” website.

In comments respecting the proposed Regulations, many interested stakeholders expressed strong concerns and urged the Government and CRTC to make significant modifications and additions.  In October, the Canadian Marketing Association confirmed in a newsletter to its members that the Government had indicated that a number of provisions in the proposed Regulations would be revisited, and further consultations initiated with stakeholder groups.

7.      The Supreme Court’s Copyright Pentalogy

Copyright cases are not often considered by the Supreme Court; indeed, the Court has apparently heard only 5 cases in the past decade that focused on substantive copyright law.  It is therefore unprecedented for 5 to be heard in a single year, never mind at the same time (all were heard in early December).  By itself, this concentration of the highest court’s attention on copyright issues earns a spot on the top ten; however the appeals also raise a number of issues of significant interest to the communications industry, including:

• the scope of the “fair dealing” exception
• whether the streaming or downloading of copyrighted content requires an additional royalty (over and above the royalty applicable for selling the content or access to the content)
• whether royalties are payable for short online previews of musical works

The Supreme Court’s consideration of these appeals is particularly timely as it coincides with Parliament’s consideration of a number of important amendments to the Copyright Act (see number 8, below), including amendments to some of the provisions at issue in the appeals. 

8.      Another Copyright Bill

For the 4^th time since 2005, the Government introduced in September a bill to implement revisions to the Copyright Act, including a number of revisions of interest to the communications industry, including:

• Anti-circumvention provisions, which prohibit tampering with Digital Rights Management protections (or digital locks) built into digital music
• Personal use exceptions that will allow for time and format shifting and back-up copies of copyrighted works – subject to any digital locks
• Education exceptions that would allow downloads of copyrighted material for study and research
• Expanded fair dealing provisions, to include use for the purposes of education, parody or satire (in addition to existing exceptions)
• A “notice and notice” regime for ISPs with respect to alleged infringements by internet users
• A “mash-up” exemption, allowing for the use of pre-existing works to create new, non-commercial works
• Revisions to the statutory damages provisions that reduce the scope of damages for non-commercial infringements

While the Heritage Minister had indicated a desire for passage by Christmas, a motion to read Bill C-11 a second time and refer it to a committee was still being debated by the House of Commons when it adjourned for the Christmas break. 

9.      Internet Traffic Management Guidelines

Also in September, the CRTC issued new procedural guidelines for dealing with customer complaints about the inappropriate use by ISPs of Internet Traffic Management Practices (ITMPs), which could include technological measures to slow down access to certain types of content in the name of managing network congestion – often referred to as “throttling.”  The guidelines, which seem intended to provide procedural certainty to both complainants and ISPs with respect to the Commission’s handling of complaints about alleged violations of its 2009 policy on the use of ITMPs, are particularly noteworthy for spelling out a range of escalating enforcement tools that will be used against ISPs that violate the ITMP policy, apparently signalling a clear “get tough” stance on the part of the CRTC.

Ironically, just as the Commission is getting tough on misuse of ITMPs, the days of using technological measures to throttle traffic may be coming to an end.  Just prior to year’s end, one of the largest ISPs in the country announced that it will stop throttling internet traffic by March of 2012.  Should others follow suit, the CRTC’s policy respecting throttling may well be moot.

10.  Telemarketing Enforcement

In recent years, the CRTC has been getting increasingly tough with telemarketers that are found to be in violation of the Unsolicited Telecommunications Rules, which include rules for the National Do Not Call List – and 2011 is no exception.  In addition to several substantial fines and alternative settlements with telemarketers, the past year is particularly notable for the Commission’s efforts respecting reciprocal international investigation and enforcement of telemarketing rules.

First, in October, the CRTC announced that it had reached an agreement with two Mexican companies related to unauthorized telemarketing and “robocalls” made to Canadians, aided by Mexico’s consumer protection agency, PROFECO.  Later that month, the Commission announced the creation of an International Do Not Call Network to facilitate international cooperation on telemarketing enforcement, which the CRTC will co-chair.

These international efforts are noteworthy given the amount of unauthorized and fraudulent telemarketing that originates outside Canada.  They may also prove significant if the same arrangements are extended to the Commission’s role as enforcer of the newAnti-Spam Legislation, once it comes into force.

Other Developments of Interest

Our sister blog, Canadian Technology & IP Law has also posted a Top 10 list, which may also be of interest to readers of Canadian Communications Law.

A Final Note

2011 was also significant to us, as it was in March of this year that we launched Canadian Communications Law.  We hope that readers have found our posts useful, and look forward to building on this year’s success in 2012.  As always, we would be pleased to receive any comments or suggestions that you may have.

Thank you to all of our readers for their support.  Happy holidays and best wishes for the New Year.

In a recent case involving telemarketing calls made to Canada on behalf of foreign companies, the CRTC has entered into a novel compliance agreement with the companies in question, aided by the local consumer protection agency.

On October 17, 2011 the CRTC announced that it had recently reached an agreement with two Mexican companies relating to unauthorized telemarketing and “robocalls” made to Canadians to promote Mexican vacation packages.

Under the terms of the recent agreement, the companies have agreed to comply with the Rules with respect to all calls made to Canadians, and to implement certain measures to ensure ongoing compliance, including maintaining  a valid subscription to the National DNCL and developing a compliance program. 

The Commission’s announcement, and the agreement to which it relates, are noteworthy for a number of reasons.

First, the CRTC has clearly asserted its jurisdiction to deal with calls made to Canada from or on behalf of entities located outside Canada.   Although the Commission does not provide explicit rationale in the agreement for its jurisdiction, it is noted that s. 41 of the Telecommunications Act empowers the Commission to prohibit or regulate the use by any person of the telecommunications facilities of a Canadian carrier for unsolicited telecommunications.  Accordingly, the CRTC would appear to have jurisdiction to deal with telecommunications calls received in Canada, regardless of where that call may originate. 

In addition, even though it appears that the calls were made by an unnamed third party, rather than by the companies directly, the companies are still liable, since the Rules impose several obligations on the “clients of telemarketers” (i.e. those who engage a telemarketer to make calls on their behalf), such as maintaining their own internal “Do Not Call” lists, and ensuring that telemarketers that they engage comply with the Rules.   

The CRTC announcement also noted that the telemarketing calls in question sometimes mentioned well-known Canadian companies, falsely implying a business relationship with them.  Interestingly, the Commission’s agreement with the companies in question include a corresponding commitment to make reasonable efforts to ensure that future telemarketing calls do not suggest false associations with Canadian companies, although the CRTC would appear to have no legal jurisdiction to deal with fraudulent or misleading telephone solicitations.  By contrast, the Competition Bureau has the authority to investigate such representations, pursuant to the misleading representations and deceptive marketing practices provisions of the Competition Act.

Finally, unlike many recent well-publicized telemarketing settlements, which have included hefty fines and monetary payments to public institutions, the agreement with the Mexican companies does not contemplate any payments whatsoever, despite the receipt of a large number of complaints and a number of clear findings of non-compliance.  One is left to speculate whether the lack of sanctions is part of a deliberate policy to use a lighter hand in dealing with foreign companies that may be less familiar with Canadian law or, rather, reflects the potential legal uncertainties of collecting administrative monetary penalties from foreign entities.

Notwithstanding the lack of monetary penalties, the agreement is nonetheless a noteworthy example of increased cooperation between the CRTC and its foreign counterparts, as the CRTC worked closely during the investigative process with Mexico’s consumer protection agency, PROFECO.  This sort of international cooperation is expected to become more commonplace in light of provisions in Canada’s new anti-spam legislation which, once in force, will provide explicit authority for the CRTC, the Commissioner of Competition and the Privacy Commissioner to share information with their foreign counterparts. 

As such, foreign companies marketing or selling goods or services in Canada should be vigilant in ensuring compliance with the relevant Canadian telemarketing and electronic marketing laws.  Similarly, Canadian companies should expect that increased cooperation could make their activities abroad more susceptible to oversight by foreign authorities.    

The CRTC has introduced new procedural guidelines - including a range of enforcement mechanisms it may use against non-compliant Internet Service Providers (ISPs) - to deal with complaints from customers who claim that ISPs are inappropriately slowing down access to certain internet content. 

The CRTC had already established a principle-based 2009 policy to deal with Internet Traffic Management Practices (ITMPs), which are economic or technological measures used by ISPs to control the flow of traffic on their networks in order to prevent or respond to congestion issues, including disproportionate use by some users.

Likely motivated by both the filing of misconceived public complaints and allegations that the CRTC has not been effective in its enforcement of the ITMP policy, the new guidelines appear to be intended to provide procedural certainty to complainants and ISPs alike with respect to the CRTC’s handling of complaints concerning compliance with that policy.

However, in what appears to be a clear shot across the bow for ISPs, the guidelines also spell out the range of enforcement tools that may be brought to bear against ISPs found to be in violation of the ITMP policy.  These measures, which range from simple requests for further information to more drastic measures, such as mandatory, court-enforced orders, include:

• Compliance meetings with the ISP
• On-site inspections or third party audits
• Commencement of a public proceeding
• Show cause hearing for the issuance of a mandatory order to take corrective actions, including partial customer reimbursement
• Publication on the CRTC website of the ISP’s name and the nature of the complaint

As provided by the Telecommunications Act, mandatory orders may be registered with the Federal Court, where they may be enforced as orders of that court.

The possibility of on-site inspections or third party audits may be particularly noteworthy, because it is a common compliant of consumers and net neutrality advocates that it is almost impossible for an individual complainant to prove that traffic was throttled, since they do not have access to ISP data, such as overall traffic loads.  Although the CRTC’s inspection and audit powers are extremely intrusive to ISPs, and have to date been used very sparingly by the Commission, even the possibility that these powers may be used in ITMP complaints may give some comfort to these critics.

There is nothing really new in any of the enforcement tools set out in the guidelines: each of the measures is rooted in the Telecommunications Act (many as explicit powers granted to the CRTC), and has always been available to enforce the ITMP policy.  What is noteworthy is the Commission’s laying out of these enforcement measures in the guidelines, sending a clear signal to critics and ISPs alike that it may “get tough” with non-compliant providers.

In an unprecedented cluster of cases focusing on copyright, the Supreme Court of Canada has recently granted leave to appeal in five separate cases involving tariffs approved by the Copyright Board. 

The cases, at least four of which will be heard on December 6 and 7, 2011, will consider tariffs dealing with online music, photocopying by teachers for instructional purposes and music in movie soundtracks.

The first case concerns a revised tariff, with significantly increased fees for the reproduction of literary, dramatic and artistic works – including books, newspapers and magazines - by primary and secondary educational institutions outside Québec. 

At issue in Alberta (Minister of Education) v. Canadian Copyright Licensing Agency (Access Copyright) is the application of the “fair dealing” exception to copyright infringement, found in section 29 of the Copyright Act, which allows copies to be made for research, private study, criticism and review.  The Copyright Board found that copies made by instructors for student use were made for the purposes of instruction or non-private study, and therefore did not qualify as fair dealing.  The Federal Court of Appeal upheld the Board’s decision.

Leave to appeal was sought by the Ministries of Education for each of the affected provinces, together will all of the Ontario school boards, which contend that a majority of the reproductions purported to be covered by the tariff qualify for the fair dealing exception.

The Court will likely build upon the fair dealing test it developed in a 2004 case dealing with the photocopy service provided to lawyers by the Great Library at Osgoode Hall: CCH Canadian Ltd. v. Law Society of Upper Canada.  In that decision, the Court pronounced that the fair dealing exception was a user’s right, and should therefore be given a large and liberal interpretation.

The Court is also likely to consider the application of the educational exemptions found in sections 29.4 to 30 of the Act, which were raised by the Applicants at the Board and at the Federal Court of Appeal -- particularly the exception allowing works to be reproduced for the purpose of a test or examination.

A similar Access Copyright tariff, which proposes significant increases to fees charged to post-secondary educational institutions for photocopied material, has resulted in apparent turmoil in the education community.  A number of colleges and universities have reportedly pulled out of the tariff arrangement, resulting in confusion among professors as to copyright liability, and the elimination of some course material.

Communication to the public

Three of these cases to be heard by the Court relate to the Board’s approval of Tariff 22A, a tariff for the communication of musical works over the Internet.  The tariff, originally filed in 1996, has already been the subject of several preliminary proceedings relating to jurisdiction, including judicial review by the Federal Court of Appeal and an earlier appeal to the Supreme Court of Canada.

In two of the Tariff 22A appeals, the Court will examine whether the streaming or downloading of copyrighted content, through distinct point to point transmissions of individual files to consumers, constitute communication “to the public” and thus fall within the scope of copyright protection afforded by section 3(1)(f) of the Act, such that a tariffed royalty is payable.

The first case, Rogers Communications Inc. et al. v. Society of Composers, Authors and Music Publishers of Canada, dealt with the approval of a tariff that imposed copyright liability for transmission of musical works by a range of “telecommunications services”, including websites providing music downloads and streaming and the Internet Service Providers who provide access to the Internet.  The second case, Entertainment Software Assn. v. Society of Composers, Authors and Music Publishers of Canada concerned liability for similar transmission of video games which contain background music.

The Federal Court of Appeal dismissed these applications, finding that a communication is “to the public” when the communicator intends the communication to be received by the public.  The number of persons who actually receive the communication was not considered to be relevant.

In the Entertainment Software case, the court below also rejected the Applicant’s argument that a de minimis rule exists preventing the imposition of a tariff in a situation where a musical work constitutes only a marginal component of a particular video game, finding that the download of a video game which includes music is a communication to the public within the meaning of section 3(1)(f) of the Act and is thus subject to a tariff.

Previews

Another of the cases stemming from the Tariff 22A decision concerns whether the tariff that would require the payment of royalties with respect to online music previews, which consist of short extracts of musical works provided to assist consumers in deciding to purchase the works in question.

In Society of Composers, Authors and Music Publishers of Canada v. Bell Canada, copyright collective SOCAN sought judicial review of the Board’s refusal to certify a tariff for previews.  The Board had concluded that users listening to previews were entitled to avail themselves of the fair dealing exception, as are those that make such previews available to users, as listening to the previews constituted research of a purchasing decision.  In doing so, the Board applied another aspect of the earlier ruling in CCH, where the Supreme Court noted that research was not limited to non-commercial or private contexts.  The Federal Court of Appeal upheld the Board’s decision, and SOCAN sought leave to appeal to the Supreme Court.

Sound recordings in soundtracks

Finally, and most recently, the Supreme Court granted leave to hear the appeal of Re: Sound v. Motion Picture Theatre Associations of Canada, which concerns whether a tariff can be imposed for the communication to the public through telecommunication of a sound recording, where the recording is part of a soundtrack that accompanies a motion picture or a television program being communicated to the public by telecommunication. 

The Copyright Board refused to approve such a tariff, noting that the Act defines “sound recording” so as to exclude “any soundtrack of a cinematographic work where it accompanies the cinematographic work.”  Section 17 provides that where a performer authorizes the inclusion of a musical performance in a cinematographic work, they may no longer exercise their rights with respect to communication to the public by telecommunication, although they may contract separately to obtain royalties for such telecommunication from the studio with the rights to the cinematographic work.

On appeal to the Federal Court of Appeal, the applicant performance right copyright collective,  Re: Sound, sought to draw a distinction between a “soundtrack” and its component parts, however the Court rejected the argument, finding that there was no legal basis for the tariffs proposed by Re: Sound since its interpretation of soundtrack would require adding words to the definition of “sound recording” found in the Act.

Conclusion

The Supreme Court’s review of these key provisions in the existing Copyright Act will be timely given the federal government’s recent announcement that it would be reintroducing Bill C-32, An Act to Amend the Copyright Act.  The Bill, which died upon Parliament’s dissolution in March of this year, contains important new prohibitions on the circumvention of “digital locks” as well as reforms of the fair dealing provisions found in the Copyright Act.  The proposed fair dealing reforms, which would include new explicit exceptions for “education, parody or satire,” were explicitly referenced by the Federal Court of Appeal in the Access Copyright case.

Copyright owners, users and commentators will be watching both Parliament and the Supreme Court in the coming months, as the potential for  significant reform of Canada’s copyright framework looms on the immediate horizon.

According to Isaac Asimov’s First Law of Robotics, a robot may not injure a human being.  According to the CRTC’s Unsolicited Telecommunications Rules, it must also not make telemarketing calls without explicit consent.

As part of its stated commitment to crack down on telemarketing violations, the CRTC  announced on August 23, 2011, that GoodLife Fitness Centres has paid a penalty of $300,000 as part of a settlement with the CRTC over violations of telemarketing rules.

An investigation by the CRTC found that between May 1, 2010 and December 15, 2010 GoodLife violated the ADAD rule 60 times by using “robocalls” to notify customers of new club openings and invite them to grand opening events.  In addition to an administrative penalty of $5000 per violation, Goodlife’s negotiated settlement with the CRTC will require it to issue a public apology and help organize a business event with the CRTC for the purpose of fostering compliance with telemarketing rules.  

When considering the use of robocall technology, organizations should be aware that such calls are treated distinctly from live voice telemarketing, which is generally permitted (subject to certain restrictions), unless the call recipient is on the National Do Not Call List (DNCL).  By contrast, the use of ADADs for solicitation is generally prohibited, unless the consumer explicitly consents.  The ADAD rules also apply whether or not a call recipient is on the DNCL, and apply to a number of types of calls that are generally not subject to the DNCL, such as telemarketing calls by charities.

It is also worth noting that “solicitation” is defined broadly to include any attempt to sell or promote a product or service, or any attempt to solicit money or donations, including on behalf of a charity.  Even where the communication is not for solicitation purposes the rules impose further restraints on ADADs, such as a prohibition on sequential dialing and time-of-day restrictions on calls.          

Since 2006, when amendments to the Telecommunications Act came into force, giving the CRTC the power to impose Administrative Monetary Penalties, telemarketing investigations have resulted in penalties of $2.84 million (of which $740,000 has been paid, under settlement terms, to post-secondary institutions), with a number of significant and high profile fines in the past 10 months. The Act allows for penalties of up to $15,000 for each contravention, and each violation that continues on more than one day constitutes a separate violation. 

As the expected proclamation in force of Canada’s Anti-Spam Legislation nears, the Government recently announced the launch of a new “Fight Spam” website; however, the site currently provides only a high-level overview of the new law, rather than a detailed compliance guide for businesses.

Likely, there will continue to be some uncertainty with respect to the practical application of the new law to specific business scenarios, until the CRTC, the Competition Bureau and the Office of the Privacy Commissioner have had an opportunity to actually apply the law, hopefully providing some guidance to the business community through the ongoing publication of decision summaries or guidelines.

The new website appears to be intended to offer plain-language guidance to consumers and businesses with respect to the general requirements of the new law, offering overviews of the main provisions of the statute and the bodies charged with its enforcement.  The site also includes a series of Frequently Asked Questions, advice as to how individuals and businesses can protect themselves against spam and other electronic threats and links to other resources, such as tips from the Office of Consumer Affairs on how users can recognize and protect themselves against phishing and spyware.

Interestingly, in the government’s announcement for the website, it indicated, for the first time, that the Act will likely come into force “early in 2012.”  Previously, it had been suggested that the statute would come into force in the fall of 2011.

Two sets of draft regulations associated with the Anti-Spam are open for comment.  Comments on the regulations proposed by the Governor in council are due by September 7, 2011; comments on the regulations proposed by the CRTC are due by August 29, 2011.

UPDATE: On 15 August 2011, the CRTC extended the deadline for submission of comments on the Commission's draft Electronic Commerce Protection Regulations (CRTC) to 7 September 2011, to coincide with the deadline for comments respecting the related draft regulations proposed by the Governor in Council.