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| Path: Main Street : Resources & Library : Research Articles : Feature Article |
Technology and the net: are you breaking the law?
Louis H. Milrad*Louis H. Milrad is Chair - National Information Technology Law Practice, and Year 2000 Professional Services Group at Lang Michener.
Reprinted with permission. Paper first presented at the Strategy Institute conference: Leveraging the power of Technology and the Internet for Non-Profits
* This paper was prepared with the assistance of Richard Venerus, Student-At-Law. The authors thank D.M.W Young, Partner, Lang Michener, for allowing his paper "Rules For Advertising & Marketing on the Internet" to be relied upon as one of the basis of this work.
Introduction
Advertising and Promotions
Relevant Intellectual Property Laws
Privacy Issues
Relevant International Agreements
Conclusion
Footnotes
Sample Ownership and Rights Provisions from typical Web Site Ownership Agreement
Introduction
Canadian law embodies a fairly comprehensive set of domestic rules pertaining to advertising, commercial and consumer transactions, and general contracting issues. Organizations are expected to abide by such rules in the conduct of their normal business operations. Sometimes such rules are modified through international treaties, trade agreements, and agreed-to standards. In these instances, domestic rules every now and then give way to prevailing international provisions or to those of other countries. Sometimes, by way of example, the prevailing law governing a business relationship between parties may not be the one specified in the contract, but rather that of another jurisdiction. In the pre-Internet days, organizations generally became accustomed to transacting business in foreign countries through investigating and adhering to the laws of the state or country in which such business was transacted. However, this has all changed with the universality of the Internet! Organizations desiring to establish an Internet presence, in particular those that propose a multi-jurisdictional presence that may include activities outside of Canada, must expand their macro knowledge base of legal issues. There are a variety of international, cross cultural and jurisdictional repercussions, many of which are of a less obvious or hidden nature. Such organizations must develop and implement protocols and procedures that will allow effective operations without violation of the laws of the foreign or home jurisdictions.Unfortunately, neither time nor space permits a treatise on the laws of the Internet. This paper will briefly deal with selected matters relevant to the creation of an Internet presence by not-for-profit organizations. Specifically, the paper will review issues of compliance with laws applicable to the following activities: advertising, promotions, contests and draws, and the use of disclaimers. In addition, the paper will give consideration to selected intellectual property law issues, privacy law developments, and relevant international agreements.
As this paper comments on certain elements of Canadian law only, it should be read with caution. Activity that is contrary to Canadian law could be perfectly legal in other jurisdictions and vice versa.
Advertising and Promotions
Internet AdvertisingAdvertising on the Internet introduces new legal risks. Specifically, on-line content can be accessed worldwide, so there is potential for international or multi-jurisdictional liability. To avoid offending foreign persons or governments, advertising content must be assessed for compliance.
It is important to understand that the nature of Internet advertising is much different than traditional advertising. Internet advertising is not broadcast or directed to the public at large, but instead is available to anyone who chooses to view it. It is not "pushed" upon people, instead a user "pulls" the information from the server on which it is held. Some commentators have argued that because of the pull nature of Internet advertising, there should be a lesser requirement for regulation. However, with the advent of "push technologies" (e.g. Pointcast, BackWeb and widely distributed, personalized Email), this argument becomes somewhat less tenable. There are many forms of advertising and marketing on the Internet. The following vehicles are used to carry Internet advertising:
(i) websites
(ii) banner advertising
(iii) cyber malls
(iv) private networks
(v) electronic bulletin boards
(vi) search engines
(vii) browser programs
(viii) direct email
(ix) sponsorship and advertorials.There is a great deal of concern about the potential for deception and fraud by unscrupulous Internet advertisers and web merchants. To date, in Canada, there has been little regulation or private litigation involving Internet advertising. However, before breathing any sigh of relief, it is to be noted that the Competition Bureau has successfully prosecuted one company in connection with a multi-level marketing scheme advertised on the Internet.1 Also, the Bureau has begun to monitor Internet advertising.2
Application of Advertising Law to the Internet
In Canada, it is necessary for Internet advertisers to comply with prohibitions against false or misleading advertising contained in the federal food and drug, consumer packaging and labelling, hazardous product, textiles labelling and the competition legislation. At the provincial level, prohibitions are found in business practices and consumer protection legislation. This paper deals with the most relevant statutes respecting advertising: the Competition Act 3 and the Ontario Business Practices Act.4Recent Changes to Competition Law In March of 1999, the Competition Act was amended with the passing of Bill C-20. The criminal advertising and marketing practices provisions, previously contained in sections 52 to 59 of the Act were repealed and substantially repeated as reviewable conduct in sections 74.01 to 74.08 of the amended Act. The amendments, in effect, "decriminalize" the deceptive marketing practices sections of the Act.
The Act now classifies as "reviewable matters", false or misleading representations, warranties and ordinary price claims (formerly section 52 of the Act, now 74.01), reasonable tests and testimonials (formerly section 53 of the Act, now 74.02), bargain price and bait-and-switch selling (formerly section 57, 74.04), sales above advertised price, (formerly section 58, now 74.05), and promotional contests (formerly section 59, now 74.06). 5
The new reviewable conduct regime provides the Competition Tribunal or the Federal Court a number of possible remedies:
(1) final cease-and-desist orders;
(2) interim cease-and-desist orders;6
(3) orders requiring advertisers to publish corrective notices
(4) orders requiring advertisers to pay an "administrative monetary penalty" 7, of up to $200,000.It is suggested, that the Competition Bureau decriminalized sections 52-59 of the old Act in order to make it easier to apply the Act to misconduct.
Deceptive and Unfair Trade Practices
Many provinces have statutory regimes to protect consumers. In Ontario, the Business Practices Act was enacted for this purpose. Essentially, an unfair trade practice is a representation or conduct that has the effect of being misleading or deceptive to the consumer.The Act provides a number of examples of unfair trade practices including: representations that the goods or services have sponsorship, approval, performance characteristics, accessories, uses, ingredients, benefits or quantities they do not have; a representation that goods are of a particular standard, quality, if they are not; a representation that a specific price advantage exists, if it does not; a representation that the proposed transaction involves or does not involve rights, remedies or obligations if the representation is false or misleading; a representation using exaggeration, innuendo or ambiguity as to material fact, a representation failing to state a material fact; or a representation that misrepresents the purpose or intent of any solicitation of or any communication with the consumer.
Potential liability under these statutes should be considered carefully, because it is very likely that an advertiser's product or service will be closely examined by at least one competitor or consumer.
Disclaimers & "Legal Pages"
A disclaimer would be used to clarify a representation that in its absence would be false or misleading under the law. Many Internet advertisements contain lengthy disclaimers which are integrated into the information communicated. Typically, disclaimers contain copyright and trademark notices which are represented as required reading before a user can move on to the substantive information contained on the Web-Site.A Legal Page sets out the terms and conditions that apply to the use of a Web-site. Legal Pages also stipulate the rights and limitations associated with a site. For instance, advertisers may wish to include disclaimers regarding the accuracy of information posted on the site; limitations of warranties and liability; warnings about use or misuse of proprietary information found on the Web-Site; disclaimers with respect to defamatory language; limitations on the re-use of downloaded software and lastly, restrictions or qualifications that apply to the claims or information presented by the advertiser. A Web-Site that offers links to other sites should include on its Legal Page, disclaimers with respect to the appropriation of rights associated with the linked site, as well as a disclaimer of any liability for statements contained on a linked site.
Under Canadian law, a disclaimer that substantially alters the primary message in an advertisement will not be effective in saving the advertisement from being found to convey false or misleading information. For example, an advertisement that claims that a product is free with a disclaimer indicating that a price must be paid. 8 Disclaimers that are prominent, rather than in the fine print, are more likely to be effective in avoiding liability for misleading advertising. Furthermore, the more sophisticated an audience for advertisement is, the more effective the disclaimer is likely to be in avoiding liability.9
Contests And Draws
One of the most popular devices used by Internet advertisers to attract interest is the sweepstakes or contest promotion. A contest on the Internet must comply with the laws of the jurisdiction of the promoter and the contestants. In Canada, Internet contests must comply with the legality of games provisions in the Criminal Code, and the disclosure requirements of the Competition Act.Section 2.06 of the Criminal Code
Under the Criminal Code it is illegal for anyone other than a licensed lottery operator to award prizes by pure chance.10 For this reason, contests usually include a skill-testing question to introduce an element of skill. In addition, games are illegal if participants "pay money or other valuable consideration" to play. Thus, contests usually provide in their rules a guarantee that "no purchase is necessary." However, if the word "consideration" is interpreted broadly, that guarantee may not be enough to avoid criminal liability. In the US, the courts have held that "consideration" may include the requirement of the participant to perform some act.11 So, the filling out of a questionnaire might be "consideration". A contest sponsor should try to minimize the actions required to participate. Another problem specific to Internet contests is that access to the Internet itself may not be free of charge. Fees paid to service providers for access to a contest site could constitute money paid, attracting liability under the Criminal Code.
Section 74.06 of the Competition Act
This section requires that a contest promoter must disclose the number and value of the prizes, and the chances of winning the contest. It would be prudent for a contest promoter to make this disclosure as conspicuous as possible. Furthermore, potential entrants should be advised of the subject of disclosure requirements as early in the contest process as possible. i.e. a "Legal Page" that makes all the necessary disclosures and lists the rules of the contest. The Act also requires that the distribution of prizes must not be unduly delayed, and that the selection of participants or prize winners must be made on the basis of skill or by random draw.
The Criminal Code can apply to third party Internet service suppliers such as host providers and access providers. Those who knowingly provide hosting services to an promoter of an illegal contest could be liable under s.206(1)(a) of the Criminal Code. An access provider who knows that its service is being used to provide access to an illegal site could be liable under s.206(1)(c).
Quebec
A contest conducted in Quebec must comply with the provincial legislation governing contests12 . This legislation requires: 1.) that a fee be paid to the province by the promoter, based on the value of the prizes offered to Quebec participants, 2.) a form be filed that includes the contest regulations and associated advertising, and 3.) if the contest promoter does not have a place of business in Quebec, security must be posted. Lastly, a contest in Quebec must also comply with the language laws of that province.
Relevant Intellectual Property Laws
The Internet provides intellectual property owners with a vast market for their works. However, at the same time, the ease of copying, distributing and downloading information over the Internet makes large-scale violations of intellectual property rights more probable. Although there is no Canadian legislation directed at governing intellectual property interests on the Internet, general intellectual property principles and law are applicable. Not-for-Profit organizations who intend to develop an Internet presence should be knowledgeable about some of the following legal issues.
Copyright Law
Copyright law applies to work found on the Internet.13 However, this paper will focus on special issues relating to the establishment of an Internet presence.Implied License
Owners of copyright who place their work on the Internet may be taken to have given consent for others to make normal use of that material. This is referred to as an "implied license". For example, the posting of a message on the Internet implies an intention that the message will be reproduced and distributed by the system operator, or that it will be downloaded by users to be read. By posting something, the individual is in effect giving a license to others to make copies at least for the purpose of downloading. The scope of the implied license can be limited by agreement or by or express notice given to users. If no limits are expressed by the copyright holder, it has been suggested that users have those rights which represent the "natural and reasonable uses of the information on the site."14 This kind of use may include the browsing of material.15 However, the rights of the user should not extend to corporate or commercial use of the material. 16
There is another type of consent that is given by placing a work on the Internet. Such placement makes that material publicly available, unless measures are taken to restrict access. That means users are entitled to use such materials under certain exemptions granted by copyright law, such as private study or educational use.
Not-for-Profit organizations may need to be more concerned than profit-oriented enterprises about implied consent. There may be a perception that because the activities of such organizations are not strictly private or commercial in nature, the information on a site is impliedly for public consumption. It would be prudent for non-profit organizations who place material on the Internet to clearly state ownership of their copyright on their web pages. They should also state that the use of any material which is subject to copyright is prohibited, except use which they may permit. Although copyright registration is not necessarily required for the protection of one's proprietary interest, it expands the scope of rights that may be exercised by the owner: registration provides evidence of the validity of the copyright ; it provides proof of creation; it is helpful in negating a defense of innocent infringement; it allows greater access to the protection provided by foreign copyright laws under the Universal Copyright Convention.17
Web-Site Development
In the first instance, the designer of a Web-Site has the sole right to reproduce, publish, or communicate its work.18 These rights can be assigned to another. The designer of a work also has the right to prevent uses of the work that may adversely affect the author's reputation, even after the sale or assignment of copyright. These are moral rights which can be waived by the designer. Anyone employing a designer to develop a Web-Site should obtain a clear assignment of the copyright, and a waiver of moral rights. A Web-Site development agreement is an essential tool for this purpose. A Web-Site agreement deals generally, with ownership of the Site as well as specific development and content issues. Specific development issues include functional and performance specifications, delivery timetables, acceptance testing, and project management. Specific content issues include, editorial approval, production credit and moral rights. Attached is a listing of some of the typical ownership clauses found in a Web-Site Development Agreement.
Trademarks
General trademark law applies directly to the Internet.19 However, this paper will only deal with the special issues of domain names and hyperlinks.Domain Names
What are they?
Actual Internet addresses are composed of four groups of numbers separated by decimals, known as the IP address. The domain name system was developed by the Internet Assigned Numbers Authority (IANA) to make it easier to remember Internet addresses.In the domain name system, an Internet address is described by the URL, or Uniform Resource Locator. The URL is usually a combination of letters and punctuation which can be broken down into a number of levels and sublevels. A top level domain is generally of two types: geographic or generic. (ex. ".ca" or ".com" ). A second level domain often includes a name. ( ex. "langmichener".)
The most popular top level names for business in Canada are ".com", ".edu", ".org", ".net" and ".ca". The ".ca" domain is managed by the CA Domain Committee (CADC). The ".com" domain is managed by InterNIC, and ".edu", ".org", and ".net" are managed by Network Solutions Inc. (NSI).20 These registrars allocate domain names to applicants on a "first-come-first-serve" basis.
Legal Treatment of Domain Names
In the domain name system, no two sites can have the same address. Each domain name must be unique and is therefore associable with only one entity. Since most elements of the URL are generic, it is the second level or "name" domain that makes the URL a unique identifier of an organization. Thus, a domain name is analogous to a trademark as a "source identifier" for the advertisers goods or services, depending on the extent to which it is used in widely disseminated advertising.
Trademark law allows more than one person to use the same name or mark as long as they are used for different products or services and create no likelihood of confusion. Thus, while two or more entities may have the right to use the same name as a trademark, they will not have exclusive right to use the trademark as part of their respective Internet addresses. The potential for a dispute over exclusive rights to a domain name containing a trademark is obvious. This problem is made worse by the fact that trademark registration can occur in more than one jurisdiction. These disputes must be resolved according to the general trademark law in each jurisdiction, and in accordance with the domain name dispute policy implemented by the relevant registration body.
Dispute Policies of CADC & NSI
Generally, these policies place the onus on the applicant to prove its entitlement to use the domain name. Neither the CADC, nor the NSI will intervene in a dispute concerning a domain name.
i.) CADC
The CADC policy states: "It is your responsibility to ensure that you have the right to use the name you have chosen. Registering a domain name does not confer any legal right to that name; you should consider registering your trademark if you have not already done so. Any disputes between the parties over the right to use a particular name are to be settled between the contending parties using normal legal methods."
ii.) NSI
The NSI policy requires rejection of domain names that contain obvious or well known names or trademarks. The policy also requires that applicants show that the proposed domain name does not infringe on any trade mark rights. An application can be challenged if there is a valid trademark. If there is a dispute, NSI will hold an application until is resolved. It should be noted that NSI domain names are subject to US legal principles, even if the applicant is a Canadian and does not carry on business in the US.
Trademark Law as it Applies to Domain Names
The use of a domain name which is the same as a recognized trademark of another, may constitute trademark infringement or the common law tort of passing off. 21
In Canada, domain names were the subject of litigation in PEINET Inc. v. O'Brien.22 The plaintiff's Internet service provider issued them the domain name "PEINET.pe.ca.". The plaintiff sought to prevent O'Brien, a former employee, from using the domain name "PEI.NET", alleging that is was confusingly similar to its own name. The Provincial Supreme Court rejected the plaintiff's motion because O'Brien used upper case letters and separated PEI from NET with a period. In ITV Technologies v. WIC Television Ltd. 23, the court refused to grant the Canadian holder of the "ITV.ca" domain name an injunction against another Canadian company using "itv.net", even though the plaintiff had a long standing registration for "ITV". The court's rationale was that the defendant's site contained an express notice that it was not affiliated with the plaintiff, and that the plaintiff had waited two year's before bringing its injunction application.
These preliminary cases suggest that it is possible to register a domain name in Canada, similar to one that already exists, as long as the domain name is not exactly the same. A non-affiliation notice would also be prudent.
Cyber-Squatting
A cybersquatter is someone who purchases a domain name with the intention of selling it for profit, either to the bona fide owner of it, or to the highest bidder. In most cases, the cybersquatter uses the domain name in some minimal way to comply with the usage requirements of trademark law. ex. a "welcome" web page with little information of any utility. The most common remedy is for the court to order the squatter to transfer the domain name to the plaintiff trademark owners. In a recent Canadian case, the Globe and Mail newspaper and Chapters Inc. bookstores announced a joint venture which would appear on the web site "www.chaptersglobe.com", which had been registered. On the day of the announcement, an opportunist registered the domain name "chapter-globe.com" and publicized it. This person then offered to transfer the domain name to the joint venture, in return for a percentage of future Internet book sales. The court awarded the Globe and Chapters an interim injunction, preventing the individual from using his "chapter-globe.com" domain name. The court found that the registration had confused potential buyers, contrary to Section 20 of the Trademarks Act. This case is still pending.
Registration
Every consideration should be given to registering domain names in the jurisdictions where substantial Internet activity is expected, and in the jurisdiction applicable to the registrar who issued the name. Registration will also ensure compliance with the applicable registrar's domain name policy. There are several other advantages to registration relating to general trademark law: Registration is constructive notice of ownership and assists in defeating a good faith defense for use of a similar or identical mark; it gives nationwide priority as of the date of registration; it gives access to the courts for relief and evidence of the validity of the mark.
Hyperlinks
Hyperlinks allow users to move from one Web-Site to another or from one page within a Web-Site to another by clicking on a highlighted word or symbol. Grounds of trade mark infringement and copyright infringement have been advanced as potential constraints on hyperlinks. A link which allows the exploitation of the content provided on another site, constitutes a wrongful appropriation of commercially valuable intellectual property. No Canadian cases have addressed hyperlinking. However, a number of provisions of the Trade Marks Act may apply.24Privacy Issues
Issues of privacy including limitations on collection and use of personal information have become a key focus of potential regulation affecting Internet commerce. This information is often collected for the purpose of: 1.) creating profiles for an advertiser's target marketing activities, 2.) calculating traffic levels in order to induce advertisers to buy space on the site. A recent survey of Web-Sites conducted by the United States Federal Trade Commission confirmed that a large number of advertisers collect information from Web-Site visitors. Of the 674 sites included in the survey, 92% were found to collect personal information. Only 14% of those provided any notice regarding their information practices, and only 2% had comprehensive privacy policies 25 on the site.Areas of Concern
The Internet provides a powerful vehicle for data collection. There are three basic avenues for potential information collection: (i) information actively provided by users when they visit a Web-Site; (ii) transaction-generated information (TGI) which is left involuntarily by a user on a visit to a Web-Site; and (iii) "cookies".
(i) Information Actively Provided By Users
Frequently, Web-Site visitors are asked to provide personal information including basic identification and billing information (name, address, telephone number, email, credit card number), demographic information and interests. Requests for this type of information are commonly found on registration pages, user surveys, on-line contests and order forms.
(ii) Transaction Generated Information (TGI)
An "electronic footprint" 26 summarizes transmission time, the length of the visit, the number and identity of pages visited and the user's type of browser and Internet address. The privacy concern is that this information collected over time can be used to create a detailed picture of the individual, his or her interests, all without the person's knowledge or control.
(iii) Cookies
"Cookies" are a specific form of TGI. They are digital files transmitted to and placed on a visiting computer's hard drive by a web browser or host Web-Site. Each time the user visits a Web-Site, the server which sent the "cookie" to the visitor's hard drive, accesses the information stored on it and reviews what the user has browsed on the site previously. Cookies are used to expedite entry into Web-Sites that require member qualification by storing the data required for access. The quality of personal information stored on a cookie is quite high because it is constantly updated.
Voluntary Standards
Voluntary standards of privacy are evolving. Some Web-Site operators develop, post and presumably abide by Privacy Statements, which are prominently displayed on the main page on a Web-Site. Typically, access to the text of policy is by a hyperlink.We have reproduced, for informational purposes, two samples of typical Privacy Statements:
First Example:Protecting your Privacy
We will take appropriate steps to protect your privacy. Whenever you provide sensitive information (for example, a credit card number to make a purchase), we will take reasonable steps to protect it, such as encrypting your card number. We will also take reasonable security measures to protect your personal information in storage. Credit card numbers are used only for payment processing and are not retained for marketing purposes.As mentioned above, we will not provide any of your personal information to other companies or individuals without your permission. We will need to provide your name and delivery address to a trusted shipping or fulfillment company if you have asked us to send something to you.
Second Example:
On-line Privacy Policy
Your right to privacy is very important. We recognize that when you choose to provide us with information about yourself, you trust us to act in a responsible manner. We believe this information should only be used to help us provide you with better service. That's why we have put a policy in place to protect your personal information.What personal information do we collect?
In general, when you visit our web sites and access information you remain anonymous. We will not provide any of your personal information to other companies or individuals without your permission. We collect only that information that we need in order to maintain a high level of customer service to you. Sometimes that is only a name and an email address, but in some circumstances, we need to have more information.
Protecting your Privacy
We will take appropriate steps to protect your privacy. Whenever you provide sensitive information (for example, a credit card number to make a purchase), we will take reasonable steps to protect it, such as encrypting your card number. We will also take reasonable security measures to protect your personal information in storage. Credit card numbers are used only for payment processing and are not retained for marketing purposes.
As mentioned above, we will not provide any of your personal information to other companies or individuals without your permission. We will need to provide your name and delivery address to a trusted shipping or fulfillment company if you have asked us to send something to you.
Privacy Laws
Common LawThe traditional view is that there is no protection for personal privacy per se in Canada 27. However, there are causes of action that exist at law and equity that protect private interests. Examples are trespass, defamation, breach of confidence, passing off and appropriation of personality.
Legislation affecting Public Institutions
The federal government and most provinces have enacted legislation that governs the collection, use and disclosure of personal information held by them.28 Certain criteria are set forth in these Acts to assist in reaching a conclusion on whether a disclosure of personal information constitutes an unjustified invasion of personal privacy. Such criteria may include: whether disclosure is desirable for the purpose of subjecting the activities of the institution to public scrutiny, whether the information is highly sensitive, whether it is likely to be inaccurate or unreliable, whether it was supplied in confidence, and whether the disclosure may damage the reputation of any person in the record. Circumstances describing an unjustified invasion of personal privacy include the release of information which describes an individual's finances, income, assets, liabilities, net worth, bank balances, financial history or activities, or credit worthiness; information that relates to medical, psychiatric or psychological history, diagnosis, condition, treatment or evaluation; or indicates the individual's racial or ethnic origin, sexual orientation or religious or political beliefs or associations. There are certain instances where disclosure does not constitute an unjustified invasion of privacy. Ex. where it discloses financial or other details of a contract for personal services between an individual and an institution.
There is no federal legislation that protects information that is collected in the course of private transactions. However, this may change with the federal government's recently introduced Bill C-54, the Personal Information Protection and Electronic Documents Act.
Bill C-54
Part I of the proposed Act will protect personal information that is collected, used and disclosed in the course of commercial activities. Specifically, it will require consent to the collection and disclosure of personal information.
Bill C-54 substantially incorporates the Model Code for the Protection of Personal Information, Q-830, (Model Privacy Code) which was adopted as a standard by the Canadian Standards Association in 1996. The Model Privacy Code reflects the OECD's Guidelines on a Protection of Privacy and Transport of Flows of Personal Data, adopted in 1980. While the proposed Act will apply to personal information collected and used in any media, it is intended to have a specific impact on information collected on the Internet 29.
One of the purposes of Bill C-54 was to enable Canadian Internet advertisers to meet the minimum standard for data use as laid down in the European unions Directive on the Protection of Individuals with Regard to the Processing and Personal Data and on the Free Movement of Such Data. The directive became effective December 15, 1998. It requires EU member states to pass legislation restricting the transmission of personal information to other member states which have not enacted similar legislation. This restriction also applies to data that flows from EU countries to those outside the EU including Canada. It is not clear that, even with the passage of Bill C-54, whether Canada would comply with the extent of protection stipulated in the EU directive. It remains to be seen what impact the EU directive will have on Internet advertising worldwide, given the fact that 80% of the Internet commerce emanates from the United States. There is no legislation similar to this directive in the United States.
Privacy-Tort Legislation
Four Canadian provinces (Newfoundland, Saskatchewan, Manitoba and British Columbia) have enacted statutes to create a tort for a person who violates the privacy of another person. This legislation prevents the use of a person's likeness, name or voice for advertising, sales promotion or other commercial use without the person's consent. To be actionable, a breach of privacy must be "substantial". Part of the analysis includes an expectation of privacy that is determined on the facts of the case.30
Québec
At present, Québec is the only Canadian jurisdiction that has enacted comprehensive privacy legislation aimed at the private sector. An Act respecting the protection of personal information in a private sector 31 (the "Privacy Act") allows individuals to access personal information held by the private sector. It also regulates the collection, disclosure and use of personal information by the private sector.
Under the Act, an organization can only collect the information necessary to provide a service or sell a product. It is obligated to inform the person concerned before or at the time it collects the information of: (1) what use will be made of the information; (2) who will have access to it, and (3) to whom the information will be disclosed. The organization must take reasonable precautions against unauthorized access and modification of the data. Generally, organizations are prohibited from disclosing the information they have collected to a third party. They are also prohibited from using that information for a purpose other than for which it was collected, unless consent to such use was given. Any consent given, must be "obvious, free, and enlightened". These obligations are very similar to those contained in Bill C-54. "Personal information" for the purposes of the Privacy Act is information that concerns a natural person and can be used to identify that person. Of course, this includes the names, addresses or telephone numbers of natural persons.
Relevant International Agreements
Activities carried on over the Internet can have consequences in many jurisdictions. No single authority controls or has jurisdiction to regulate the Internet. Most domestic legal systems are based on the principle that sovereign states have exclusive jurisdiction in their own territories. This principle is reflected in the public international law principle that each state has jurisdiction to make and apply its own laws within its territorial boundaries. In situations, where multiple states could rightfully claim to have jurisdiction over a matter, this matter might be subject to unexpected, haphazard, uncoordinated, regulation from more than one jurisdiction. To reduce the risks and costs associated with multi-jurisdictional regulation, states enter into treaties and agreements designed to develop laws of universal application. There are no international treaties that deal specifically with the Internet yet, although some treaties contain provisions that may apply to the activities carried out on the Internet.WIPO Copyright Treaty
WIPO treaties oblige signatory states to implement legal protection for intellectual property rights. These treaties grant to the owners of copyright, the exclusive right of communicating their works to the public in such a way that the public may access these works "on demand". i.e. from a place and time individually chosen by them. This provision seems to address the issue of copyright on interactive transmissions on the Internet. WIPO copyright protection extends to work available on the Internet even when it is not accessed.
Uniform Electronic Commerce Act
The Canadian Uniform Law Conference, a working group which consists of representatives of the federal, provincial and territorial governments, has proposed the implementation of the Uniform Electronic Commerce Act (UECA) 32. The UECA is the Conference's attempt to implement the United Nations Model Law on Electric Commerce. The UECA was adopted in principle by the governments of Canada in August 1998.
The UECA has two parts, one for general records and one for government records. The intention is to give the government more control over the use and the inflow of electronic information. Some of the key sections are reviewed here:
a) Section 3 of the UECA states that information shall not be denied legal effect solely on the grounds that it is in the form of an electronic document. Section 3 ensures equal legal effect to electronic documents in the absence of specific rules that would deny the effect.
b) Section 5 deals with the provision of information. In order for a document to have been provided to someone, it must be under the control of that person. In addition, the information contained in it must be accessible so as to be usable for subsequent reference. This section is important with respect to notices on a Web-Site. The notice would not satisfy section 5 until the intended recipient of the notice actually downloads it.
c) Section 6 has similar rules to section 5 but deals with prescribed forms.
d) Section 7 states how one satisfies a demand for originals.
e) Section 8 is the signature rule. It requires that a person signing a document should choose a method that indicates the person's approval of what is signed. The legal effect of the signature is left to the general law. The signature may be connected to the document in many ways i.e. it may be incorporated in to, attached to, or logically associated with it. The UECA does not define an electronic signature.
Conclusion
It is incumbent upon any organization proposing an Internet presence to develop and implement an organizational strategy which not only addresses the functional, business and technical elements, but also regulatory compliance issues. This paper has demonstrated that these compliance issues are numerous and varied. It also demonstrated that it may be difficult for an organization to protect intellectual property placed on the Internet. To deal with these Internet "pitfalls" it may be wise for non-profit organizations to request the assistance of legal counsel. Hopefully, this paper has provided some of the basic knowledge your organization needs to identify possible problem areas.Click here for Sample Ownership and Rights Provisions from typical Web Site Ownership Agreement.
Footnotes
1. R. vs. The Integrity Group Canada Inc. (Alta. Q.B.), December 16, 1997.2. C. Raquel Larabee-Larabie-LeSieur, "Misleading Advertising on the Internet: Competition Law Enforcement in the Electronic Market Place", Speech by the Deputy Director of Investigation and Research (Marketing Practices) to Canadian Corporate Shareholder Services Association Conference, "Fraud on the Internet," September 19, 1996.
5. However, it is still a criminal offence to make a representation to the public which is false or misleading in a material respect where the representation is made for the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest by any means whatsoever. Section 52(1) of the Competition Act
6. Interim orders are an important issue in advertising because they will determine whether a particular advertising campaign will live or die. The interim cease-and-desist orders have a maximum life of 14 days. The orders shall be sought on at least 48 hours notice to the person against who the order will apply. An order can be obtained if there is a strong prima-facie case that serious harm is likely to ensure without the order.
7. The Bureau is adamant that "Administrative monetary penalties" are not fines. Unpaid penalties are treated as debt to the Queen, rather than as a contempt of court.
8. R. v. The Cameo Sleep Shop Ltd. (Ont. Prov. Crt. March 11, 1996)
9. Purolator Courier Ltd. v. United Parcel Service Canada Ltd. (1995) C.P.R. (3d) 473, (Ont. Gen. Div.).
11. Knox Insdus. Corp. v. State, 258 P.2d 910 (Okla. 1953).
12. An Act respecting lotteries, racing, publicity contests and amusement machines, R.S.Q. c.L-6.
13. The Copyright Act has been interpreted broadly in its application to new forms of expression. Apple Computer Inc. v. MacKintosh Computers Ltd., (1986) 8 C.I.P.R. 153.
14. Gahtan, Kratz, Mann, Internet Law (1998) at p.133
15. Foresight Resources Corp. v. Pfortmiller, 719 F.Supp. 1006 (D Kan. 1989)
16. Ryan et. al. v. The Uncover Company and Knight-Ridder Information, Inc.
17. Under the UCC, a form of copyright notice is a condition precedent to a claim of rights.
18. Section 3(1) of the Copyright Act
19. A key section the Trademarks Act is Section 22 , which provides that no person "shall use a trade-mark registered by another person in a manner that is likely to have the effect of depreciating the value of the good will attaching thereto".
20. The NSI/InterNIC monopoly is being dismantled. In an agreement between the US government and NSI, a non-profit corporation, (Internet Corporation for Assigned Names and Numbers), ICANN will administer the domain name system.
21. Inset Systems Inc. v. Instruction Set Inc. (1996) U.S. Dist. LEXIS 7160
22. (1995) 61 C.P.R. (3d) 334 (P.E.I.S.C.)
23. (1997) 77 C.P.R. (3d) 486, (F.C.T.D.)
24. Section 7 contains provisions which address unfair competition including causing confusion as to the source of any product, passing off and using a misleading description as to character, quality or mode of manufacture of a product. Under Section 20, "infringement" is deemed to include the use of another person's trade mark in a manner that is confusing with a second trade mark. Section 22 prohibits the use of another person's trade mark in a manner likely to depreciate the value of the goodwill attached to it.
25. FTC Report on Consumers' on-line privacy June 4, 1998
26. J. Sessler, "Computer Cookie Control; Transaction Generated Information and Privacy Regulation on the Internet" (1997) 5 J.L. & Pol. 627 (Lexis)
27. Bingo Enterprises Ltd. v. Plaxton (1986) 26 D.L.R. 4th 604 (Man. C.A.)
28. The Federal Privacy Act applies to all government departments, most Crown agencies and some Crown corporations. Similar legislation applying to the provincial governments came into effect in 1987. Throughout 1988 and 1989, its application was extended to community colleges, district health councils and agencies.
29. For example the Bill includes e-mail addresses as part of the definition of "personal information". The Bill requires any advertiser who wishes to use an individual's email address to obtain consent from that person and disclose the purpose before seeking consent.
30. Silber v. B.C. Broadcasting System (1985), 25 D.L.R. (4th) 345 (B.C.S.C.).
32. The Conference has traditionally played the role of a harmonizer of statute law.
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