Jun 7, 1996
Internet Risks and Opportunities: What You Need to Know and Developments that Will Change the Way You Give Legal Advice
by Gary Dunn

Source: G. Dunn. Prepared for the Pacific Rim Computer Law Institute, a joint institute of the British Columbia, Washington and Oregon Continuing Legal Education Societies, Seattle, Washington, June 7, 1996.

I. INTRODUCTION

For a select few in the know, the internet (the "Information Highway") has provided a cheap and efficient method of communication for years. But use is changing, particularly with the growth of networked communication via the world wide Web (the "Web") and its supporting technologies. Tentative experiments are being conducted by business to explore the commercial uses the internet might be put to. If we were students of marketing we might see a parallel between the evolution of marketing and the growth of the Web, because the Web has the potential to mimic the telephone, television, books and magazines.

When considering issues arising out of the growth of the Information Highway, the paradigm that one uses to understand and explain it can have a profound effect on the results of the inquiry. One might even say that "we don't even know what we don't know".

Marshall McLuhan said of television that "the medium is the message" and predicted "the global village". The Internet seems to be the platform that will take globalization and the ability to freely exchange information and ideas to the heights envisioned by Mr. McLuhan some fifty years ago.

Even so, cultural and legal differences are unlikely to evaporate. Even a close and apparently similar neighbour such as Canada can have a different cultural attitude than the United States of American, often as a result of different historical experiences. This shows up in materially different approaches to things such as cultural sovereignty, methods of doing business, foreign investment, health care, decency, and the relationship between the individual and the state. We can expect social values and legal systems to grind, and to see an increased need to cooperate in the face of this diversity.

In the face of this, the legal community is charged with upholding and defending the rule of law. As the keepers of this gate, the legal profession tends to look backwards when developing responses to new issues.

Over the course of time, the legal role has changed many times depending on ones perspective. For example, a significant part of the legal community is now employed in the protection of property rights. This is in part the expression of the paradigm that places property rights at the forefront of civilized society.

The extension of this property based paradigm is that we tend to look to the creation of new or expanded property rights in order to advance societies goals, because we equate the advancement of individual rights with society as a whole. Some might say that this advancement has nothing to do with society and everything to do with individual market share, and that there are other ways to advance these goals.

There is always a concern that the legal system will end up answering more to the authority of economic might than any rule of law, particularly in times of economic concentration. It is not hard to foresee a time when national boundaries become irrelevant to information based commercial activities. At that point, the power of government to intervene and protect society may be substantially reduced to the point where an unacceptable amount of power has passed to the private sector.

Therefore, we must carefully examine whether the creation of new information based rights contribute to society as well as to the individual.

We must not forget that the values of those working in the information technology sector are often, and may remain, different than those in the corporate and financial worlds. This may in part be based on a perception of dishonesty by government and business, and in part on the inability or failure of government and business to take care of all of their constituents. Whatever the reason, it is not surprising that many people do not have the same responses to property rights and rewards that one might have encountered post World War II.

In the face of this, the challenge for the legal community may well be to devise, by looking forward instead of backwards, legal structures that minimize this potential for conflict.

II. COPYRIGHT AND THE INFORMATION HIGHWAY

A. THE ADVISORY COUNCIL ON THE INFORMATION HIGHWAY

The Advisory Council on the Information Highway was formed in 1994 by the Minister of Industry. The one year mandate of the Council was to study the issues and make recommendations to government on a strategy to build a Canadian Information Highway. A variety of the Council's important publications can be found here.

The Advisory Council had five working groups, one of which was the Working Group on Canadian Content and Culture. This Group established the Copyright Subcommittee in the same year.

The Advisory Council ultimately made a series of recommendations with respect to Canadian Culture and Content and Information Controls, which are specifically referred to later in this paper.

The Minister of Industry has given himself until the end of April, 1996 to decide on the extent to which he will accept the Council's recommendations. At the time of the writing of this paper, the Minister had not made his decision public.

B. COPYRIGHT SUBCOMMITTEE

The mandate of the Subcommittee was to identify the specific issues and make recommendations on the role of copyright in the context of the Information Highway. The Final Report of the Subcommittee on Copyright was released in March 1995. A copy of the report is available here. A summary of the sixteen recommendations made by the Advisory Council based on the Copyright Subcommittee's report is available here.

Those recommendations include the following:

1. multi-media protection - there is no need for a new category of work based on delivery format. The definition of "compilation" was viewed as more than sufficient to protect multi-media works;

2. rental rights - a further tightening of the Copyright Act to prevent hidden or unauthorized acts of commercial rental, particularly of computer programs and sound recordings. Although technically reproduction and not rental occurs on the Information Highway, the Committee felt that digitization and the ease with which additional copies could be created would result in more opportunity for abuse off the Information Highway;

3. browsing - the addition to the Copyright Act of a definition of "browsing", along the lines of:

"browse" means a temporary materialization of a work on a video screen, television monitor or similar device, or the performance of the audio portion of such a work on a speaker or a similar device by a user, but does not include the making of a permanent reproduction of the work in any material form".

4. fair dealing - although the Subcommittee felt that the current fair dealing provisions apply to the digital environment, they recommended the amendment of the Copyright Act to clarify this and to ensure that fair dealing also applied to the electronic copy, and the storage and the transmission of that copy;

5. moral rights - that moral rights be maintained in the digital environment, that moral rights be brought back to their original intention, namely where the modification is to an original, and that no consideration be given to establishing a category of works having a regime of protection limited to moral rights;

6. Crown copyright - that Crown copyright not be abolished, but that a greater effort should be made to make information available on the Information Highway without payment or prior authorization. Where Crown copyright is reserved for revenue purposes, it was recommended that it be limited to marginal cost recovery, and that publication rights be granted on a non-exclusive basis;

7. electronic distribution right - there is no need to introduce new rights, such as an electronic distribution right, because the right to communicate to the public is already contained in the Copyright Act. Similarly, there is no need to introduce a first-sale doctrine, because there is no need for an electronic distribution right.

8. copyright use monitoring - the federal government should assist in the development and standardization of user-acceptable ways to track the use of protected works. The federal government should also assist in the development of "identifiers" to be included in the distribution of protected works in a digital format to make it easier to trace copyright ownership and unauthorized use;

9. infringement - the tampering or bypassing of any kind of encryption or copyguards should be made a criminal offense under the Copyright Act and that a right to statutory damages based on the U.S.A. model be introduced;

10. rights clearance - the federal government should encourage the creation of a system to streamline the clearance of rights for use of works in a digital medium; 11. compulsory licensing - it should not be considered in the commercial marketplace;

12. bulletin board system operator liability - no bulletin board operator should be liable for copyright infringement if they did not have actual or constructive knowledge that the material offended copyright, and they acted reasonably to limit potential abuses.

13. public education - that government and industry work together on a public education campaign about the use of copyright on the Information Highway.

C. ELECTRONIC DISTRIBUTION RIGHTS

The owner of a copyright has the exclusive right to communicate the work to the public by telecommunication - subsection 3(1)(f) of the Copyright Act.

When interpreting this section, a distinction must be made between the communication of copies, and the transmission of a performance of the work. This section technically deals with the former. In the digital environment however, both copying and electronic performances would be caught by the application of this section.

D. PERFORMING RIGHTS

Web sites with an entertainment content now form the largest category on the Web. Of these, sites with music content are again the largest. These sites include virtual radio stations, in addition to sites which offer down loading. Bandwidth size is not the barrier to "streamed audio" that it is to down loaded music files, so there is not the same technical impediment to this part of the industry.

SOCAN (The Society of Composers, Authors and Music Publishers of Canada) has filed a proposed tariff under the Copyright Act which will allow licensing music transmitted on the Internet, bulletin board systems and on similar networks.

The basis for their rights lies primarily in the exclusive right of a holder to communicate works to the public by telecommunication. In Canada, it will therefore not be necessary to distinguish between performance and copying for purposes of the license

One benefit of the proposed tariff will be to remove uncertainty regarding infringement by users and service providers alike through the blanket license. For example, even if the tariff is not approved, the right to sue for infringement will still exist. Canada is a highly regulated environment, and the filing of the tariff represents the first step in the consultative process leading to the approval of a license from the Copyright Board. As part of this process, which is similar to rate hearings for utilities and license hearings by the Canadian Radio and Television Commission, there will be public hearings.

Proposed Tariff 22 provides for a license fees of $0.25 for every subscriber on a service that does not earn advertising revenue, and a fee of 3.2% of gross revenues for those that do (minimum $0.25).

The tariff will be retroactive to January 1, 1996 when approved. Approval is not automatic, and the consultative process could take from months to years, depending on the attitude of the Copyright Board.

A variety of different licensing models are being experimented with in North America. For example, ASCAP is experimenting with a server based license, and BMI is currently licensing users. How to license satellite based servers is one of those interesting jurisdictional issues that one will have to deal with in the future. These licenses are limited territorially, but just what that means remains open to interpretation.

It remains to be seen whether a model for licensing will be adopted throughout North America. Given different cultural and regulatory environments, it is unlikely.

E. LIABILITY OF BBS'S AND ISP'S

The Copyright Act exempts common carriers from liability for infringement arising from the unauthorized electronic distribution of a work to the public - subsection s 3(1.3). When interpreting this subsection, a distinction must be made between the communication of copies, and the communication of a performance.

Independent service providers (ISP)or the operators of bulletin board systems (BBS) would not qualify as common carriers.

To the extent that courts in the U.S.A. have relied on the infringement of distribution rights as the basis for their decisions, the same results might not be obtained in Canada.

F. FAIR USE DOCTRINE

Fair dealing is a defense to infringement rather than an exception to the rights of the owner of a copyright - subsection 27(2) (a) and (a.1). It usually arises in cases of reproduction, and requires that a substantial part of a work has been copied.

The purpose of the fair use must be for newspaper summary, review, criticism, research or private study. Unlike the U.S.A., teaching and scholarship are not purposes for which fair use can be invoked.

The doctrine also does not appear to apply to unpublished works in Canada.

In Canada, copyright infringement would not be decided by a jury Therefore, there has been little guidance in Canada as to the extent of the reproduction authorized by this defense. Not surprisingly, a full reproduction and an abridgement have not qualified as fair use. There is no suggestion that detailed legislative guidance will be provided in Canada with respect to this doctrine.

G. COMPILATIONS

The definition of "compilation" contained in section 2 of the Copyright Act contemplates multi-media and other works resulting from the selection and arrangement of multiple works, or of data. The definition of compilation was added as part of the North American Free Trade Agreement (NAFTA). Prior to that, the courts had satisfactorily relied on the definition of a collective work contained in the same section to protect multi-media.

Unlike the U.S.A., compilations are more likely to receive copyright protection in Canada. Canada still relies heavily on the overall effort put into the arrangement to determine if it constitutes a literary work. See British Columbia Jockey Club v. Standen (1985) 22 D.L.R. (4th) 467 (B.C.C.A.). After the NAFTA amendments, there is some question as to whether labour alone is sufficient to create copyright in compilations of data. This is because the definition of compilation only refers to "selection or arrangement". It has been suggested that this omission will not diminish the level of protection, because the intention of the NAFTA amendments was to provide a minimum level of protection, and expressly authorizes stronger protection for works beyond the standards set by the agreement.

H. MORAL RIGHTS

Moral rights arise out of subsection 14.1(1) of the Copyright Act. This right of integrity is considered infringed if the work is distorted, mutilated or otherwise modified, or if the work is used in association with a product, a service, cause or institution - section 28.2. This right attaches to the honour and reputation of the author, and has been likened in the Copyright Subcommittee's report to an action for defamation. Actions to enforce this right in Canada are rare. These rights cannot be assigned, but can be waived.

When the Copyright Act was amended in 1988, the limitation of moral rights to original works was not maintained, and now appears to apply also to copies of works. It is accepted practice in Canada to obtain waivers from authors of software programs and multi-media.

The Copyright Subcommittee recommended that moral rights be restored to their original intent, namely the protection of originals. To the extent that works are associated with products or services, and the injury therefore being protected against relates to the association rather than with a modification or mutilation, it is suggested that this right should remain intact and not be modified.

III. CANADIAN DOMAIN NAMES

A. THE NAME SPACE

Most countries, including the U.S.A., have a name space which is particular to the respective country. In Canada, the name space is denoted by the suffix ".ca". A description of the "us" domain name space can be located here.

Technically, the CA domain is a top level domain name space, the same as "com", "EDU", "org", etc. The CA domain is very small compared to the other top level domains. Use statistics can be found at ftp://ftp.cdnnet.ca/ca-domain/statistics.

There are no set rules as to how name spaces must be organized. There is a general belief that a flat name space (with no suffixes) would not work for the world, both because of technical issues and because, people being people, some distinction makes names easier to handle.

In Canada, the Registrar and his committee have structured the name space according to Canadian political geography. This translates into domain names that have up to three components in addition to the distinguishing name component. For example, a national domain name would end in ".ca", a provincial domain name would end in ".bc.ca" and a municipal name would end in ".vancouver.bc.ca".

When organizing the name space, a variety of criteria were considered - for example, to provide a reasonable structure for the name space, to avoid over-regulation, to provide a system which could be delegated at a later date to regional registrars, and to facilitate the registration of the same name at different domain levels. An example of this would be for the addresses of two schools having the same name in different parts of the country. Consideration was specifically given to structuring a system which could be administered at a later date by others, for example the regional body in charge of corporate names.

B. THE DOMAIN REGISTRAR

The CA Domain Registrar has the authority to issue top level domain names with the suffix ".ca".

John Demco of the Department of Computer Sciences at the University of British Columbia has been the Registrar for many years. Mr. Demco's position is unpaid, as are the services rendered by the committee members who assist him.

The Registrar derives his power from IANA (the"Internet Assigned Numbers Authority"). He has no legislative authority, and derives his power only through voluntary compliance. Like the United States of America, there is no technical or legal impediment to someone creating another top level domain name. Unlike the telephone system, where central control is facilitated because little intelligence resides in the equipment, it would be very easy to point a computer to a different name servers which accommodates the "unauthorized" domain name structure.

For the same reason, it may be more difficult in the future to exert regulatory control over the internet.

To date, there has been no move to transfer the authority over the Registrar to a not for profit organization such as the Internet Society, which was formed in the U.S.A (http://www.isoc.org). There also has not been any challenge to date in Canada with respect to the Registrar's powers.

The Registrar has not delegated his power with respect to the management of any of the subdomains. This is in contrast to the U.S.A., where the U.S. Registrar is willing to and has delegated the power to manage subdomains.

C. NAME APPROVAL

Guidelines for name approval can be found with the application form for a domain name. To qualify for the ".ca" suffix, the highest level name in this domain, one must be incorporated federally, have a registered trademark in Canada, or have offices or points of presence in more than one province. To qualify for the provincial level, one must have offices or points of presence in more than one location in the province, or be an government, educational institution, or hospital. The balance of names will be granted in the municipal sub domain. Proof of qualification is required for all names other than at the municipal level.

The Registrar will only permit an organization to register one name. It is difficult to change this name later. This policy is becoming an issue now that more and more organizations are considering obtaining domain names for registered trademarks. To date, no domain names have been granted for this purpose.

Geographic place names have been reserved by the Registrar, as have all one letter names. In keeping with the desire that domain names bear a close connection to an organization's name, two character "names" are also closely looked at before they are approved.

There is nothing in the Registrar's policies to prevent a name from being granted in the CA domain which is otherwise identical to another name in one of the other top level domains, provided that it meets the criteria for registration in Canada.

To assist in searching for existing names, a list of existing names can be accessed through the homepage of CaNet (http://www.canet.ca/canet/index.shtmll). It is recommended that a trademark search be performed prior to proceeding with a domain name registration. The Registrar does not perform this search.

D. APPLICATION PROCEDURE

The application form for any of the CA domain names can be obtained at ftp://ftp.cdnnet.ca/ca-domain/application-form.

There is no intention at present to institute a policy of charging for name registrations.

E. TRADEMARKS AND CONFUSION

There is also no policy in place as to when identical names will be granted for different subdomains. To the extent that neither of the names are registered trademarks, certain other issues might arise - for example, is the domain name sufficient to qualify as a trademark, and is there a likelihood of confusion or passing off? See PEINET Inc. V. O'Brien (1995) 61 C.P.C. (3d) 334 (PEISC).

Whether a domain name will qualify as a trade name remains a question of fact. Both the use of the "tradename" and its' ability to distinguish the wares or services would be looked at to determine if it qualifies.

When considering whether two names are confusing, it has been speculated that changes in technology will relegate many domain names to relative obscurity. This is happening to a degree already with the use of index services, such as Yahoo, and the search engines, such as Lycos, which provide links and descriptions to other sites in a way that diminishes name prominence.

There is a growing awareness in Canada of the possibility for confusing domain names. The prudent course of action is to obtain a domain name in all of the name spaces that one qualifies for. For a business, this conceivably would include ".com", ".ca", "org" and in some cases ".net".

F. DISPUTE RESOLUTION

The Registrar in his policies makes it clear that no rights are conferred by the granting of a domain name.

There is no policy in place regarding conflicts over domain names. This is expected to change, although no change is imminent.

If a dispute were to arise, the Registrar's policy is to look to the parties to resolve it directly, or through the courts.

IV. TRADEMARKS

A. GENERALLY

A trademark can cover both goods and wares in Canada. Section 19 of the Trade-marks Act grants the owner of the trademark the exclusive right to "use" the mark in respect to those wares or services.

B. USE - WARES V. SERVICES

The concept of use is important both to qualify a trademark and to restrain others from using it.

In Canada, trademarks relating to services enjoy a greater degree of protection than do trademarks relating to wares. The Trade-marks Act contains an anomaly with respect to wares versus services. In order to constitute deemed use with respect to wares, the trademark must be used in association with the wares at the time of the transfer of the property in or possession of the wares, or alternatively marked on the wares themselves or on the packages in which they are distributed -subsection 4(1). With respect to services, subsection 4(2) deems use to occur whenever a trademark is used or displayed in conjunction with the performance or advertisement of a service.

This effectively means that, in Canada, one cannot use another's trademark on the packaging of goods, or at all in conjunction with services. Additional restrictions found in Canadian legislation, such as the Competition Act, also prevent passing off, misleading statements, dishonesty, or depreciation in goodwill relating to a trademark.

In internet based commerce, it is not hard to imagine title passing at the time of the transaction. This would be consistent with the instantaneous payment nature of the transaction. Additionally, to the extent that electronic "goods" are being sold, it is also conceivable that possession might also pass. If this is the case, imbedding the trademark in the electronics goods would constitute marking and use for purposes of the act. See BMB Compuscience Canada Ltd. v. Bramalea Ltd.(1989) 22 C.P.R. (3d) 561 (F.C.T.D.). If this is correct, it will become more difficult to use the trademarks of others with respect to the sale of goods.

Whether the combination of the display of a trademark and the link to another site displaying goods or services similar to those protected by the trademark would constitute use remains to be seen. Conceivably, electronic commerce could see a trademark lawfully used in the home jurisdiction but unlawfully used in the jurisdiction where the contract was deemed to take place.

C. INFRINGEMENT

To quote Hughes on Trade marks, (Butterworths Canada Ltd., 1984-1996) at 586,

"The extent of the exclusive right given by s. 19 of the Trade-marks Act is defined by the mark as registered; the ambit of protection for it is expanded by s. 20 when what is done by another is likely to cause confusion and by s. 22 when what is done is likely to depreciate the value of the goodwill attached to the trade marks."

Additionally, there is a statutory passing-off right contained in section 7 of the Trade-marks Act, which codifies, and arguably extends, the common law right.

The combination of Canadian legislative provisions appear to bestow similar rights in Canada as those conferred by the Lanham Act. In the case of section 7 of the Trade-marks Act, it is not necessary that the activity take place in conjunction with the use of a trade mark. Having said that, Canada has not adopted the approach of the U.S.A. in permitting trade mark use in the context of encouraging freedom of speech.

The use of a domain name that was similar to or confusing with a registered trademark will likely constitute an act of trademark infringement, provided that it is used in a way that constitutes use" as contemplated by the Trade-marks Act.

Canada does not have the equivalent of the Federal Trademark Dilution Act of 1995. It is expected that similar legislation will be introduced in shortly.

Canada does not recognize personality rights to the same extent as the U.S.A. See "Personal "Privacy, below.

D. COMPARATIVE ADVERTISING

Section 20 of the Trade-marks Act prevents the depreciation of the goodwill of another's trademark. Subsection 36(1) of the Competition Act provides similar remedies with respect to goodwill. While comparative advertising is not the only way that this can happen, it is hard to imagine much comparative advertising taking place in Canada that does not also infringe a trademark.

Comparative advertising identifies the competition in order to claim superiority or to enhance the perceptions of ones own brands. Traditionally, comparative advertising enjoys the greatest use in times of declining consumption or where a competitor has little market share, which suggests that we might see this practice used for electronic commerce.

Comparative advertising is practiced much more widely in the U.S.A. than in Canada. To date, there has been little litigation in Canada, owing in large part to the absence of treble damages provisions in Canadian legislation.

The lack of regulatory controls surrounding the internet may well lead to an increase in litigation over this practice.

In Canada, comparative advertising has been largely regulated by the broadcasting networks, and other carriers of advertising, in the interest of self protection. In Canada, the degree of scrutiny of advertising copy by broadcasters is much lower than in the U.S.A. This is so partly because for reasons, and partly because of the tradition of absolute control enjoyed by the CBC in Canada, which permitted little in the way of comparative advertising.

Only recently has the claim of a right to freedom of speech been invoked to permit advertising.

Section 52 of the Competition Act, which prohibits misleading advertising, is also relied on when challenging comparative advertising.

A useful primer on comparative advertising is contained in the article by Jenna D. Beller, The Law of Comparative Advertising In the United States and Around the World: A practical Guide for U.S. Lawyers and Their Clients, The International Lawyer, Winter 1995, at 917.

V. ELECTRONIC COMMERCE

A. INTRODUCTION

Canada is at a similar stage of development to the U.S.A. with respect to adopting electronic commerce - infancy.

As technology improves to the point of permitting the delivery of broadcast services over the internet, Canadians can expect continued intervention by government to determine the rights of the telephone utilities, the cable companies, and conventional broadcasters, with respect to both rights of carriage and content.

Only now are people beginning to ask themselves what they might do with this new and unknown technology. One hears less and less the criticism that there is nothing for them on the Internet, and they have no use for it. This, one suspects, is because people are shifting from a position of rejection based on ignorance to a sense of excitement based on the potential to learn something new and potentially beneficial. The adoption of electronic commerce will be no different than the adoption of other technologies such as the telephone - a process.

It is an adage of adult education that adults will only learn those things which they think will clearly benefit them. We are now in a position where we can be very clear about the capabilities of the Web today, and we are in a much better position to postulate what the Web could be used for in the future. This increased understanding will encourage more people to become users for just the purpose that suits them. And as more people use the Web, we can expect that they will discover more uses that will benefit them as individuals - resulting in exponential growth.

Recent proclamations have harkened the death of the Internet, as registrations with service providers have leveled off after a period of spectacular growth. Little attention has been paid to this in Canada, except perhaps by the financial community, vendors of home PC's and independent service providers. Rather, conventional wisdom likens what has happened to the creation of a large installed user base - the beginning of a marketplace has been created.

It appears that business is starting to formulate an understanding of the Web. This is showing up as an increase in the number of Web sites devoted to the advertising of products - based, it appears, on a strategy of reaching new markets with little marginal cost.

Early growth in direct sales is also be expected to take place in markets where conventional channels of distribution are not working or are inadequate - for example, where the "just in time" purchasing of commodity goods is required. Significant advances with respect to the transmission of moving images, and with virtual reality will be necessary before we can expect significant durable goods consumption.

Web based commerce can be expected to show up first with respect to goods and services associated with gambling and sex. With this trend, it is amusing to think that the very sites that are being singled out for distributing objectionable material are in fact now self-regulating - to access them, one must pay.

The growth of Web based commerce will depend on social acceptance and the creation of legal infrastructures promoting commerce. Reference is made to an excellent paper by Amelia H. Boss, Professor of Law, Temple University School of Law, Philadelphia, PA. entitled "Security: It ain't just a matter of encryption - The Development of Legal Infrastructures To Support the Growth of Electronic Commerce", presented to a conference devoted to electronic data interchange held in Montreal in August 1995.

B. FORMATION OF CONTRACTS

Professor Boss makes the point in her paper that the level of security people are looking for in order to use electronic commerce is not just against theft or alteration, but also against the uncertainty arising from uncertain legal and social structures. To quote Professor Boss:

"Indeed, if there were not both social and legal consequences which flowed from a business's failure to live up to its contractual obligations, I submit that we would find far fewer people following through on their contractual obligations."

To consider electronic commerce, we are forced to deal with contractual issues that we long ago took for granted in the domestic environment. In particular, we are faced with jurisdictional issues and choice of law questions. This is so even domestically in light of inter-provincial and state commerce.

Current law leaves much to be desired if it is to be utilized for electronic commerce. Before considering the options of private treaty and international agreements, I will refer to three initial aspects of contract formation as examples of the need for comprehensive rules to govern all aspects of contract law.

1. No necessity for writing

In Canada, it is not generally required that a contract be evidenced by writing. This is specifically provided for with respect to sales of goods in section 8 of the Sale of Goods Act (British Columbia).

There are limited exceptions, primarily with respect to the sale of land, guarantees and indemnities - see for example section 54 of the Law and Equity Act (British Columbia).

Even if writing is called for, the legislation does not contemplate the issues of authenticating who the parties are, their signatures, the originality and permanence of the agreement, etc.

2. Offer and acceptance

In Canada, in order to create a contract, notice of acceptance must be conveyed to the party offering. Judicial interpretation has been steadfast in requiring that notice of acceptance be given, particular in cases where methods of instantaneous communication have been used to convey the offer.

Generally, an advertisement to sell goods or services will be considered an invitation to treat - in other words, the solicitation of an offer. This is the case even though goods are priced and available for selection and delivery. See for example, R. v. Bermuda Holdings (1970) 9 D.L.R. (3d) 595 (B.C.S.C.). A vendor will therefore have to convey notice to the purchaser that it has accepted an offer in order to bring a contract into existence, subject to exceptions based on performance.

Judicial interpretation is unlikely to change this for internet made contracts. This conclusion is based on the belief that, at least initially, the majority in number of contracts made will either be consumer based or will require the delivery of goods at a later date, and will therefore attract judicial protection.

3. Capacity

The age of majority in British Columbia is 19 - the Infants Act. Contracts made with infants are not enforceable, although the "infant" can ratify the contract after reaching the age of majority.

Present technology does not permit one to verify the age of the contracting parties.

C. INTERNATIONAL INFLUENCE

There is already an international model law in place governing international commerce that has been adopted by many states. The United Nations is also in the process of finalizing a model law dealing with electronic commerce. As Professor Boss points out in her paper, there is a remarkable level of consensus between these and other proposed models with respect to the issues involved. While we wait for legislative sanction for these models, there is the option of adopting these or similar models by agreement.

1. UN Convention on Contracts for the International Sale of Goods

This treaty was implemented both federally and provincially in Canada by the respective International Sale of Goods Acts. Constitutional jurisdiction in Canada with respect to property rights rests at the provincial level, hence the need for provincial approval after national adoption.

The application of the convention may be excluded pursuant to Article 6 of the convention. It has not been decided if merely specifying the choice of law is sufficient to do so.

In addition to providing specific rules for the creation of contracts, the convention also addresses delivery, conformity of the goods, and remedies for breach of contract.

While it is possible for a state to derogate from the provisions of the convention permitting a contract to come into existence that is no in writing, Canada has not exercised this right.

2. UN model law on electronic data interchange

The United Nations Commission on International Trade Law (UNCITRAL) continued its deliberation regarding the introduction of a model law on legal aspects of electronic data interchange and related means of communication at the Fiftieth Session of the United Nations in 1995. Further consideration of the proposed model law will take place in 1996. The recommendations originate from the Working Group on Electronic Data Interchange, which operates from Vienna, Austria.

Not only is the model law intended to deal with disparities among national regimes, but it also provides a model for a number of countries where existing laws governing electronic communication and storage of information are inadequate or outdated.

The basis of the model law is a recognition that "legal requirements prescribing the use of traditional paper-based documentation constitute the main obstacle to the development of modern means of communication". The proposed model law is based on what the Commission describes as a "functional-equivalent" approach, namely how could the purpose and function of the paper-based requirement be fulfilled in an electronic environment.

3. PRIVATE RULE MAKING/ARBITRATION

Although it is beyond the scope of this paper to discuss private rule-making, it is always open to the parties to agree on rules as opposed to being bound by the existing state of the law.

Private agreement invariably provides for an alternative dispute resolution facility. The ability to have such awards judicially reviewed in Canada varies from province to province. In British Columbia, the state of the law is much the same as the United Kingdom - in the interests of speed and finality, leave to appeal is generally granted only where the award is obviously wrong at law. This is a much more restrictive view than in the other provinces.

An excellent review of the current state of the law has been written by John Chapman in his article "Judicial Scrutiny of Domestic Commercial Awards" (1995) 74 Canadian Bar Review 401.

VI. FREEDOM OF SPEECH V. CENSORSHIP

A. THE ADVISORY COUNCIL ON THE INFORMATION HIGHWAY

Reference is made to the recommendations of the Council which can be located here. The difficulty of its task is reflected in the seven recommendations, which are presented with nothing in the way of concrete recommendations.

The majority of the Council's recommendations can be summarized under four categories - international treaty development regarding harmful and illegal communications, the creation of technical solutions to enable users to select the content they wish and to enable the tracing of information originating in Canada to a verifiable person and site, the development of codes of ethics and practices for users and independent service providers, and the legislative clarification of the liability of owners, operators and users of the Information Highway.

The model of the internet that one adopts may play a significant part in the view that one has with respect to government intervention. If one adopts a model based on the experience of the telephone, the primary emphasis will be on the privacy of individual communication. If one adopts a model based on book publishing, the primary emphasis is likely to be on regulation, based either on the belief of a right to free access to content (the civil libertarian view) or on the belief that illegal content is at the end of every link and must therefore be controlled.

B. CANADIAN CULTURE AND CONTENT

Canadians, with typical understatement, see themselves as fundamentally different from citizens of the U.S.A. Canada has very different historical traditions, both in the political and cultural arenas. Notwithstanding the protests of U.S.A. content providers such as the broadcasting and book publishing communities, Canadians view content restrictions to be the first line of defense against Americanization. To Canadians, the fact that access to certain markets is restricted is the trade-off.

The Advisory Council recommended that the Canadian Radio and Television Commission (the "CRTC") be charged with the implementation of cultural policy objectives for the Information Highway. The CRTC is currently charged with the administration of the Broadcasting Act. Additional information about the CRTC can be obtained at http://www.crtc.gc.ca/.

The book publishing industry has been identified as an important source of content for the Information Highway. This industry is viewed in Canada as being at great risk due to the comparative economics of scale in the U.S.A. and to trade practices such as dumping. Non-specific short and long term measures have been recommended to protect this industry.

Other initiatives that have been specifically mentioned in the recommendations include the continued enforcement of a discrete Canadian marketplace for Canadian content, ensuring that there is priority carriage of Canadian content on distribution systems, and the promotion of the expression of differing views on matters of public concern.

While it is beyond the scope of this paper to examine this issue, cultural content policies can be expected to continue to be a source of friction between Canada and the U.S.A. with respect to the Information Highway.

C. ILLEGAL V. OFFENSIVE CONTENT

Like the U.S.A., Canada has a doctrine of freedom of expression. While offensive content will be protected by this doctrine, illegal content will not. Examples of illegal content include hate propaganda, obscenity, pornography, harassment, defamation and libel. It is beyond the scope of this paper to deal with these issues other than to raise the policy issue of information control versus freedom of expression.

In Canada, a variety of federal, provincial and municipal statutes govern illegal content. The most common regulatory agency that is encountered by the general public is the provincial film and video review boards in each province, which have the power to prohibit certain content and enforce certain age regulations.

Since 1992, the "community standards" test of obscenity has been refined in Canada. It is now a criminal offence to produce or distribute sexually explicit material involving violence or children, or material that is deemed to be degrading or dehumanizing. At the same time, it was decided by the Supreme Court of Canada that if one group's freedom of expression actually harmed another group and undermined the social-equality rights in the Canadian Charter of Rights and Freedoms, then the right to freedom of expression could not be relied on.

With respect to resellers of pornography, the same court has decided that in order to be convicted of knowingly reselling pornographic materials, the reseller must at least have a general idea that the material offends the law.

At present, the federal and provincial legislative and regulative bodies do not appear to intend to implement content controls with respect to offensive content. The Advisory Council recommends that the federal government take an active role in educating the public and law enforcement officials about illegal content, and that they assist in the development of technical solutions to help people wishing to filter content to do so.

D. BANS ON PUBLICATION OF EVIDENCE AT TRIAL

A variety of sections in the Criminal Code of Canada give the presiding judge the authority to restrict the publication of information and evidence arising out of the proceedings. Traditionally, this is invoked at the preliminary hearing stage (see for example, section 539), which in Canada is held post - charge and pre - committal to trial. The entrenched belief in Canada is that courts should be open, and bans on publication are a limited exception to this. Bans on publication are viewed as being a necessary control against abuse by the media, which is perceived to arise out of a lack of balance in reporting.

The ban on communication does not apply to private communication, but only to newspapers and broadcasting.

A recent example of a ban on publication was made in Nova Scotia with respect to the preliminary hearing of a former premier on several charges of indecent assault and rape. See R. v. Regan (unreported). In this case, the presiding judge specifically declared that the ban applied to electronic media, including communication via the internet.

Enforcement of bans on publication is often theoretical. Additionally, accepted constitutional wisdom in Canada does not permit the regulation of conduct that occurs in another country. For that reason, the mere placing of material on the internet in another country is unlikely to be a breach of a ban on publication. It is not as clear what the attitude of a court would be to a reporter who, after being present at a hearing, then breached the ban by leaving the country and deliberately promoted the availability of the information in Canada via the internet.

In the absence of significant abuse, it is unlikely that the Canadian government would attempt to regulate the electronic passage of information back into Canada.

Similarly, the right to "televise" court proceedings is not uniform in Canada, and varies from court to court. Where permitted, broadcasting is not an absolute right.

E. PERSONAL PRIVACY

1. Generally

The Information Highway Advisory Council issued a discussion paper in October, 1994. A copy of the report can be found here.

The discussion paper talks about privacy issues, the current standard of protection in Canada, and possible approaches for Canada. The Council ultimately issued a series of recommendations in its final report which can be found here. Among other things, it recommended the adoption of the principles contained in the Model Code for the Protection of Personal Information developed by the Canadian Standards Association, that companies should be free to develop their own encryption systems, that the Clipper Chip should not be adopted at this time, and that there is a need for a "secure" internet.

While there has been talk about extending the coverage of the federal Privacy Act to the private sector, there is a reluctance to do so and further exacerbate the differences between regulated and unregulated sectors. This act is administered by the Privacy Commissioner of Canada. The commission maintains a presence at http://infoweb.magi.com/~privcan/.

The Privacy Act (B.C.) creates a tort of privacy, actionable without proof of damages. While "privacy" is not defined, it does include eavesdropping or surveillance, which it can be assumed would also include electronic invasions. The act exempts publication if the matter is judged to be of public interest or fair comment on a matter of public interest.

2. Personality Rights

The Privacy Act also makes it a tort to use the name or portrait of another for the advertisement or promotion of the sale of property or services without the consent of the person. Section 3 of the act requires that "...the court is satisfied that..." the defendant intended to refer to the plaintiff or to exploit his name or reputation. Quebec, Saskatchewan, Manitoba and Newfoundland have similar, but not identical, legislation dealing with the same subject. The common law considers the appropriation of an individual's personality to be a tort. This right has been severely limited to date, in that the redress is limited to the taking away of the individual's right to bestow a recommendation for the goods or services. The right does not extend to the depiction of someone in their field of endeavour. By way of example, copyright has been used in a limited number of instances to protect the depiction of cartoon characters.

The B.C. statute has only occasionally been relied on, and the utility of the statute is open to question.