Canadian Compliance Essentials: What U.S. companies coming to Canada need to know about advertising,...

Canadian Compliance

Essentials What U.S. companies coming to Canada need to know

about advertising, competition & privacy law

Topics include

1. Trade-mark protection

2. Québec-specific laws

3. Employment and labour issues

4. Contests and promotions

5. Time on sale and pricing practices

6. Misleading advertising

7. Competition Bureau enforcement priorities

8. Comparative advertising

9. Social media

10. Canada’s new anti-spam legislation (CASL)

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Gowlings at a glance

• One of Canada’s largest

law firms

• Over 750 professionals

across 10 offices

worldwide

• Recognized expertise in

business law, advocacy

and intellectual property

law

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Gowlings at a glance

www.gowlings.com

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Canadian Compliance Essentials

• Canada and the US have a lot in common but have

two distinct legal systems

• Today’s webinar will highlight some of the

similarities and significant differences between the

two legal systems

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1. Trade-mark registration

• Why register your mark?

• By virtue of using your trade-mark you can generate

rights; however, these are limited in geographic scope

• Registration gives you the exclusive right to use the mark

across Canada in association with the products and

services listed in the registration

• Applying for a trade-mark provides public notice of your

intention to adopt the mark on a searchable public

database (free deterrent system)

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• When should you consider a Canadian trade-mark?

• As early as possible

• Consider the Canadian market in conjunction with the

U.S.

• You can apply to register the mark on an “intent to use”

basis

• Be wary of clever Canadians that may apply for the mark

in Canada before you think about the Canadian market

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• Advantages of applying for a trade-mark

• Some “free enforcement” at the Trade-marks Office level

• Public searchable database

• Examiners will block confusing trade-mark applications

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• Packaging and labelling

• Every inscription on the product or on materials (e.g.

label, tag, warranty, etc.) must have equally prominent

French and English

• Commercial advertising in Québec must use French

language in a 2:1 ratio

• Catalogues, brochures, folders, commercial directories

and any similar publications must be drawn up in French,

subject to certain exceptions

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• Trade-mark exceptions

• The Charter of the French language specifically exempts

“recognized trade-marks” from the requirement to

translate into French

• The enforcement office currently takes the position that the

marks must be registered to benefit from exemption

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3. Employment and labour issues

• Main differences between the U.S. and Canada

• In Canada, we do not have the concept of employment “at

will”

• Employment law is a provincial responsibility, except for

employees working in a federally regulated industry

(approx. 10% of Canadian workforce)

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• What you need to know about running contests

• Voting is susceptible to cheating – you need safeguards

• Problems with “instant win” – alphanumeric codes can be

broken

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• Peculiarities about Canadian contest law

• In Canada, you are required to have an element of skill in

a contest

• Specific disclosure requirements under the Competition

Act requiring that you disclose in your advertising regional

allocation of prizes, retail value, etc.

• Québec: Contests must be filed in advance, pay a duty

and potentially post a security bond

• French Charter requirements

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• Amendments to Competition Act in 2009 – Canada

moved from having some of the strictest criminal

provisions dealing with pricing practices to among

the most liberal regimes in the world

• Price discrimination and predatory pricing will only be

problematic where engaged in by a dominant firm or

group of firms with anti-competitive intent, and where

that conduct is likely to substantially lessen or

prevent competition in the relevant market

• May still attract significant administrative monetary

penalties (AMPs) – up to $10 million for a first

offence and up to $15 million for repeat offences

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• RPM (resale price maintenance)

• Unless the producer or supplier has a degree of market power,

is not acting unilaterally and/or is causing an adverse effect on

competition from imposing a minimum resale price, RPM is ok

under Canadian law

• A producer or supplier of a product who does not have

a degree of market power and is acting unilaterally can:

• Tell retailers and other resellers “you will put your prices up or

we will stop supplying you”

• Tell retailers and resellers they have to advertise a particular

price; that they can’t discount; and that they can’t advertise a

discount

...as long as there is no adverse effect on competition

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• No AMPs for RPM unless the test for abuse of

dominance is also met

• Remedy = an order prohibiting the producer or supplier

from continuing to engage in that conduct

• Except for the largest producers and suppliers,

there is now far more latitude and flexibility in

structuring and implementing vertical pricing

practices in Canada

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• Advertising a sale

• Ensure you have a comparison with the ordinary selling

price

• You must have sold your goods at this price for the majority

of the time the product has been sold or have sold the

majority of the volume at this price

• Ensure your sale does not run for more than 90

consecutive days

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• Competition Act and how it works

• The federal Competition Act is the primary statute

regulating advertising and marketing practices in Canada

• Designed to regulate activity that may have anti-

competitive effect, such as mergers, collusive behavior,

price-fixing and misleading advertising

• Advertising and marketing practices regulated on dual-

track basis – criminal / civil misleading advertising regime

• The core of both tracks is the same – prohibition against

making a representation to the public that is false or

misleading

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• Criminal

• Typically reserved for egregious cases such as fraud

• Includes a general provision that prohibits materially false

or misleading representations made knowingly or

recklessly

• Potential penalties include fines in discretion of court and

up to 14 years imprisonment

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• Civil

• No requirement that conduct was engaged in “knowingly

or recklessly”

• Penalties include an AMP of up to $10 million for a first

violation, and up to $15 million for any subsequent

violation

• Other potential remedies include corrective advertising,

prohibition orders and restitution to consumers

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• Increased enforcement in recent years

• The Bureau has placed considerable emphasis on

enforcement of the misleading advertising provisions in

recent years

• Follows dramatic increase in 2009 in severity of penalties

for both criminal and civil misleading advertising

• Shift in focus from criminal cases involving fraudulent

advertising schemes to high-profile civil cases involving

mass marketing

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• The Bureau’s practical enforcement priorities

include:

• False or misleading online testimonials

• False or misleading disclaimers

• Unsubstantiated performance claims

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• Key things to remember

• Always substantiate your claims!

• Claims regarding performance, efficacy or length of life of

product require adequate and proper testing prior to

making the claim

• Advertising Standards Canada (ASC) – self regulatory

body that administers the “Canadian Code of Advertising

Standards”

• Alternative to costly court processes

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• Copyright Act

• Prohibits the reproduction of a substantial part of another

party’s protected work

• Can include artistic works such as logos and packaging

designs

• The Copyright Act allows the plaintiff to pursue you for

damages or an accounting of profits; statutory damages

available as well

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• Trade-marks Act

• Section 7(a): No person shall make a false or misleading

statement tending to discredit the business, wares or

services of a competitor

• Applies to registered and unregistered trade-marks

• Section 22: 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 goodwill attaching to

that mark

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9. Social media

• Privacy

• Canada’s federal privacy statute (Personal Information

Protection and Electronic Documents Act or PIPEDA)

requires consent from an individual before you can

collect, use or disclose an individual’s personal

information (which includes email addresses)

• Intellectual property

• Canadian copyright law does not have a “safe harbour”

provision, so you need to include a UGC posting policy

and moderate vigilantly

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10. Canada’s new anti-spam laws (CASL)

• Expected to come into force in 2014

• Could lead to a significant increase in the number

and importance of individual and class action

privacy cases in Canada

• Will prohibit sending commercial electronic

messages, unless the sender has the prior express

or implied consent of the recipient

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• Important differences between CASL & CANSPAM

• CASL applies to more than email messages

• CASL will be an “opt-in” consent regime, while CANSPAM

is “opt-out”

• CASL will set higher maximum penalties for violations

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• Key points from a privacy litigation perspective

• Will create administrative monetary penalties and a

private right of action in respect of unsolicited commercial

electronic messages

• AMPs as high as $1 million (individuals) and $10 million

(corporations)

• Compensation in an amount equal to the actual loss or

damage suffered and statutory damages of up to $1 million

for each day on which a contravention occurred

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• Key points from a litigation perspective (cont’d)

• CASL will also extend the private right of action for

compensatory and statutory damages to breaches of

PIPEDA

• CASL will add both civil and criminal provisions to the

Competition Act with severe penalties

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To view our webinar titled:

Canadian Privacy and

New Anti-spam Laws: What You Need to Know to Comply

Click on the link in the resources tab

of the webinar portal

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Q&A 32

Thank You

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Visit: www.gowlings.com

Email: [email protected]

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Canadian Compliance Essentials: What U.S. companies coming to Canada need to know about advertising,...

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