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Private Right of Action under Canada’s Anti-Spam Law

When Canada’s Anti-Spam Law (CASL) came into effect in 2014, certain sections relating to a “private cause of action” enforced through the Courts did not take effect until 1 July 2017.  With the date of 1 July2017 rapidly approaching, this article will review what this private cause of action may mean to individuals and businesses.  There must be an underlying commercial purpose to trigger the application of CASL and there must be an absence of express consent.  The prohibited activities CASL is intended to capture are the sending of unsolicited electronic messages (section 6), the diverting of electronic messages to another destination (section 7) and the installing of a computer program on another person’s computer system (section 8).
To this point,   the Canadian Radio-Television and Telecommunications Commission (CRTC) has been the only entity with the ability to enforce CASL.   As of 1 July, the “private right of action” comes into effect and organizations that are not CASL compliant, will be subject to lawsuits brought by affected individuals.  The legislation will allow affected individuals to sue organizations and their officers, directors and agents for alleged CASL violations.  If, after a hearing, the Court is satisfied that the Defendant/Respondent has engaged in prohibited activities, the Court has the power to order the Defendant/Respondent to pay to the Plaintiff/Applicant compensation for actual loss or damages suffered, along with monetary penalties.   The maximum monetary penalty for sending unsolicited electronic messages is $200 for each message, to a maximum of $1,000,000 per day.  The maximum monetary penalty for diverting electronic messages is $1,000,000 per day.  The maximum monetary penalty of installing computer programs on another person’s computer is $1,000,000 for each contravention.   Of course, the Court is not going to order the maximum in each case.  The Court will consider the nature and scope of the prohibited activities, the financial benefit obtained from the prohibited activities, any history of previous contraventions, the compensation awarded to the Plaintiff/Applicant, and  the Defendant/Respondent’s ability to pay.
It is apparent that there are financial incentives now in place to entice persons who are aggrieved to launch this new private right of action under CASL.  If you do business on the internet which involves the extensive use of email, care must be taken to ensure that you have mechanisms to secure express consent, so that your activities do not become prohibited activities.  If the business you do on the internet has been adversely affected by a third party who has engaged in prohibited activities, you may seriously consider launching an action under CASL to  obtain compensation for your losses, along with whatever monetary penalty you can convince the Court is warranted to curb such activities in future.

Use of Photographs

A number of years ago I was asked to rescue an advertising agency.  The advertising agency required a picture of a dancer for the advertising campaign for a large company.  The advertising agency had obtained clearance from the photographer, but had not paid any attention to the identity of the dancer in the picture.  For their purposes, it did not matter as long as a dancer was depicted.  It turned out that the dancer was famous and regularly charged a fee for endorsing any product or service.  All licensing of the dancer’s image was done through a licensing agency, which instructed a legal firm to contact the large company.  My client, the advertising agency, took the “high road” and undertook to bear the cost of rectifying their mistake.  I negotiated a licensing fee, which the advertising agency promptly paid.  However, they had learned a rather expensive lesson.  As I am a lawyer and the matter was settled out of court, in light of the duty of confidentiality that I owe my clients, I am unable to divulge the identity of my client, the identity of the large company, the name of the famous dancer or the settlement amount.

To be clear, it is not necessary for a person to be famous for him or her to have the right to demand a royalty or license fee for use of their image in advertising.  For example, under the British Columbia Privacy Act, it is a tort (meaning it is illegal) for a person to use the name or portrait of another for the purpose of advertising or promoting the sale of, or other trading in, property or services, unless that other, or a person entitled to consent on his or her behalf, consents to the use for that purpose.  Though, to be clear, a person is not liable to another for the use, for such  purposes, of his or her portrait in a picture of a group or gathering, unless the person complaining of the use of the picture is (a) identified by name or description, or his or her presence is emphasized, whether by the composition of the picture or otherwise, or (b) recognizable, and the person who used the picture, by using the picture, intended to exploit the plaintiff’s name or reputation.  Many other jurisdictions have similar laws.

The recent case of Saad v. Le Journal de Montreal, illustrates the more common issue with use of photographs or images, being infringement of copyright (rather than unauthorized use of a person’s image). Le Journal de Montreal was doing an article on a person and asked that she provide a photograph to be used along with the article.  Le Journal de Montreal did not pay attention to the identity of the photographer or ascertain ownership of copyright in the photograph.  The photographer sought compensation for the unauthorized use of the photograph.  Le Journal de Montreal first argued that they had no knowledge that their use of the photograph would constitute infringement.   The Court did not accept that argument as newspapers regularly have to deal with photographs and the photographers name was on the photograph.   Le Journal de Montreal then argued that they fit into an exception provided in the Copyright Act that allows use of a photograph as “fair dealing” for the purpose of news reporting.  The Court noted that in order to invoke the “fair dealing” exception Le Journal de Montreal would have had to acknowledge the source of the photograph by giving the photographers name.  Furthermore, the photo had nothing directly to do with the subject matter of the news article and, therefore, was not “for the purpose of news reporting”.  In the result the photographer was awarded $2000 plus costs.

Legal firms with experience in intellectual property, such as Thompson Cooper, are asked to address these type of issues relating to photographs relatively often.   Parties wishing to use a photographs of persons should be aware that proper authorization  may require  not only the consent of the copyright owner, but also, in some circumstances, the consent of the person who is the subject of the photograph.

CAT CHASES DOG (DANGERS ASSOCIATED WITH PUBLICLY ACCUSING A COMPETITOR OF INFRINGEMENT)

A client called me the other day to discuss some steps he wished to take against a competitor who was infringing his patent.    The client wanted to write letters to some major companies that were purchasing product from the competitor, to make them aware of the infringement and advise them that he would be forced to sue them if they continued to purchase the competitor’s product.  The second step he wished to take was to place an advertisement in a magazine widely read in the industry, to inform companies in the industry of the alleged infringing activity by the competitor.  I advised my client that there were some practical reasons why taking these steps might end in disaster.   Firstly, when you threaten companies with legal action, they are not inclined to do business with you.  In other words, it is bad for business to sue customers.  Secondly, when you make statements tending to discredit the business of a competitor you are “potentially” breaching section 7 (a) of the Trademarks Act which reads:
“No person shall make a false or misleading statement tending to discredit the business, wares or services of a competitor.”
My client protested that everything he was going to place in the letters and the advertisement was absolutely true.    In the recent Federal Court case of Excalibre Oil Tools V. Advantage Products, a businessman with the same attitude as my client found out the hard way the risks of making statements about a competitor that turned out to be false.   Advantage sent letters to customers of Excalibre alleging infringement of three patents. However, when the patent infringement action subsequently proceeded to Court, Advantage Products lost; the Court found key claims to be invalid and the remaining valid claims not to be infringed by Excalibre.  The case is presently proceeding to the “damages” phase to determine the amount Advantage Products is going to have to pay as compensation to Excalibre for making false and misleading statements that discredited the business of Excalibre.   Why give your competitor grounds to counter-claim?  If you believe your competitor is infringing, communicate directly with the competitor and, if the matter remains unresolved, sue.

Internet Cases on Websites involved with “Scraping”

“Scraping” occurs when a business pulls commercial content from the websites of other businesses using web crawlers or other technologies, and then uses that commercial content for its own commercial purposes.
On April 13, 2017, a decision was rendered in the United States in the case of Craigslist, Inc v. RadPad Inc.  Craigslist alleged that RadPad had “scraped” thousands of Craigslist user postings.  It also alleged that RadPad had harvested user contact information to send spam in an effort to entice Craigslist users to switch to RadPad’s competing service. The Court awarded $60.5 million in damages, including:  $40 million based upon violations related to harvesting from 400,000 emails, $20.4 million for copyright infringement based upon “scraping” commercial content from the Craigslist website, and $160,000 for breach of contract as the scraping activities breached the terms of use for the Craiglist website.
On April 6, 2017, a decision was rendered in Canada in the case of Trader Corporation v. CarGurus.  Trader and CarGurus are competitors in the digital marketplace for new and used vehicles in Canada.  CarGurus “scraped” car dealership websites for photos of cars for sale.  Of the 197,740 photos that were obtained and used by CarGurus, Trader was able to prove that 152,532 of the photos had been taken by photographers paid by Trader.  CarGurus argued that, as the images were located on the car dealership servers and not on CarGurus server, CarGurus had not reproduced the photos but had merely “framed” them.  The Court found that CarGurus had made the photos available to the public for commercial purposes and rejected the suggestion that the photos had not been “reproduced” and rejected any “fair dealing” defence.
CarGurus then  argued that it was entitled to the benefit of section 41.27 of the Canadian Copyright Act, which is intended to protect search engines such as GOOGLE and which reads:
Injunctive relief only — providers of information location tools
41.27 (1) In any proceedings for infringement of copyright, the owner of the copyright in a work or other subject-matter is not entitled to any remedy other than an injunction against a provider of an information location tool that is found to have infringed copyright by making a reproduction of the work or other subject-matter or by communicating that reproduction to the public by telecommunication.
Conditions for application
(2) Subsection (1) applies only if the provider, in respect of the work or other subject-matter,
(a) makes and caches, or does any act similar to caching, the reproduction in an automated manner for the purpose of providing the information location tool;
(b) communicates that reproduction to the public by telecommunication for the purpose of providing the information that has been located by the information location tool;
(c) does not modify the reproduction, other than for technical reasons;
(d) complies with any conditions relating to the making or caching, or doing of any act similar to caching, of reproductions of the work or other subject-matter, or to the communication of the reproductions to the public by telecommunication, that were specified in a manner consistent with industry practice by whoever made the work or other subject-matter available through the Internet or another digital network and that lend themselves to automated reading and execution; and
(e) does not interfere with the use of technology that is lawful and consistent with industry practice in order to obtain data on the use of the work or other subject-matter.

Meaning of information location tool
(5) In this section, information location tool means any tool that makes it possible to locate information that is available through the Internet or another digital network.

The Court rejected this defense.  The Court found that the section did not afford protection to providers, like CarGurus, that gathered information on the internet and made it available to the public on the provider’s own website.  CarGurus was not acting as merely a search engine.

Having won the case, Traders sought “statutory damages”, the provisions of which read:
Statutory damages
38.1 (1) Subject to this section, a copyright owner may elect, at any time before final judgment is rendered, to recover, instead of damages and profits referred to in subsection 35(1), an award of statutory damages for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally,
(a) in a sum of not less than $500 and not more than $20,000 that the court considers just, with respect to all infringements involved in the proceedings for each work or other subject-matter, if the infringements are for commercial purposes.

If just the statutory minimum damages were granted, these damages would have amounted to $500.00 per photo x 152,532 photos owned by Trader for a total of $76,266,000.00.

However, the Judge felt that an award of $76,266,000 would be grossly out of proportion to the severity of the infringement and modified the award as a special case to $2 per photo x 152,532 photos owned by Trader for a total of $305,064.  In making this determination, the Judge applied section 38.1(3) of the Copyright Act, which reads:

Special case
(3) In awarding statutory damages under paragraph (1)(a) or subsection (2), the court may award, with respect to each work or other subject-matter, a lower amount than $500 or $200, as the case may be, that the court considers just, if
(a) either
(i) there is more than one work or other subject-matter in a single medium, or
(ii) the award relates only to one or more infringements under subsection 27(2.3); and
(b) the awarding of even the minimum amount referred to in that paragraph or that subsection would result in a total award that, in the court’s opinion, is grossly out of proportion to the infringement.

The factors that the Court considered in  deciding to treat this matter as a “special case” were the fact the CarGurus had not acted in bad faith and had, in fact, obtained a legal opinion that the conduct was permissible before engaging in the activity.  Unfortunately for CarGurus, the legal opinion was wrong because the lawyer involved incorrectly assumed that the photos belonged to the dealerships. Further, the Court felt that there was some bad faith on the part of Trader.  Although the parties had corresponded in an attempt to settle the dispute prior to litigation, Trader intentionally did not disclose the critical fact that Trader owned the photos until after litigation was commenced.

These cases will provide some guidance to those whose business model involves “scraping” content from the websites of others.