Canada: The Second Wave Of CASL: Transmission Data And Computer Program Rules In Effect Soon

CASL's anti-spam rules have been in effect for just over four months, and many organizations have adjusted (or are adjusting) to them. While anti-spam compliance is a work in progress, it is important to remember that CASL addresses more than just spam. Specifically, CASL's altering transmission data rules and installation of computer program rules will come into force on January 15, 2015.

What Do the Altering Transmission Data Rules Say?

CASL prohibits anyone from altering or causing to be altered, in the course of a commercial activity, the transmission data in an electronic message so that the message is delivered to a different destination from the one the sender specified, unless the sender or recipient expressly consent and the sender provides an opt-out mechanism. The prohibition does not apply if the alteration is made by a telecommunications service provider (TSP) for the purposes of network management.

The practice of altering transmission data usually arises from hackers and malware. The vast majority of legitimate businesses will therefore have little concern about this rule (unless their IT systems have been hacked causing them to violate this prohibition).

What Do the Installation of Computer Program Rules Say?

CASL prohibits anyone from installing or causing to be installed, in the course of a commercial activity, a computer program on any other person's computer system without express consent or a court order. "Computer program", "computer system", "electronic message" and "commercial activity" are all broadly defined, giving the prohibition a very wide reach. Indeed, since "commercial activity" does not require an expectation of profit, CASL may apply to free downloads. Moreover, the prohibition does not distinguish between malware and legitimate business software. It applies to any computer program, and it does not seem to matter if the installation is triggered by the installer or the owner/authorized user. And "install" is not defined at all, which creates significant uncertainty about the scope of the rules. The prohibition applies to computer systems located in Canada and to persons who, at the relevant time, are in Canada (or acting under the direction of persons in Canada) when they install computer programs on someone else's computer system.

What is Express Consent?

Consent must be express, and the rules for express consent are the same as those for commercial electronic messages (CEMs) in the anti-spam rules.

Unlike the anti-spam rules, which allow for implied consent in limited circumstances (e.g., where there is an existing business or non-business relationship between the CEM's sender and the recipient or where the recipient has disclosed or conspicuously published his or her electronic address), there are no such implied consent exceptions for the installation of computer programs.

That said, the transition provisions create implied consent to install upgrades or updates on programs that were installed before January 15, 2015 for three years, unless the users give notice that they do not want the installation anymore.

CASL does say there is deemed consent to the installation of certain things (including cookies, HTML code, Java Script and operating systems) if the user's conduct is such that it is reasonable to believe that the user consents to the installation of those things.

CASL's regulations also extend the deemed consent rule to a program:

  1. installed by a TSP solely to protect the security of the TSP's network from a current and identifiable threat;
  2. installed to update or upgrade the TSP's network; or
  3. necessary to correct a failure in the operation of a computer system or program installed on it and installed solely for that purpose.

CRTC regulatory guidance says that this last category means that the computer program does not function properly and is not consistent with consumer expectations.

It is not yet clear how this deemed consent rule will be applied, or how an organization can document its "reasonable belief" in a way that is useful for responding to complaints.

This deemed consent rule also creates further uncertainty. For example, it specifically mentions cookies – but cookies do not clearly fit the definition of "computer program" in the first place. So are cookies "computer programs", such that they can only be installed if it is reasonable to believe that the person consents? Interestingly, CASL regulators have given conflicting interpretations that arrive at the same result. Industry Canada has said that cookies are not programs; the CRTC has said that cookies are programs but are not "installed" and so are not subject to CASL. In the end, both regulators seem to agree that cookies are not captured by the computer program rules – which begs the question why cookies are specifically mentioned in the deemed consent provision.

What Information Must Be Disclosed?

CASL sets out the specific information that must be disclosed when requesting consent to install a computer program. There are two levels of disclosure:

  • Basic disclosure for "standard" programs, in which the organization must clearly and simply state the purpose for which consent is sought and the prescribed information identifying the person seeking consent (which is the same as for CEMs), and must clearly and simply describe, in general terms, the computer program's function and purpose. The consent request must also state that the person whose consent is sought may withdraw consent; and
  • Enhanced disclosure for programs that, contrary to the recipient's reasonable expectations, perform certain invasive functions (including collecting personal information stored on the computer system, interfering with the user's control of the computer system, and changing already-installed settings or preferences without the user's knowledge).

    For these programs, the organization must:

    1. clearly and prominently, separately from the licence agreement, describe the program's material elements that perform the function, including those elements' nature and purpose and their reasonably foreseeable impact on the computer system's operation;
    2. bring those elements to the recipient's attention separately from the other information provided in a consent request;
    3. get written acknowledgment (in paper or electronically) that the recipient understands and agrees that the program performs the specified functions;
    4. be able, for at least one year after installation, to withdraw consent to the installation of computer programs if the recipient believes that the program's purpose or impact was not accurately described when consent was requested; and
    5. without cost to the user, help the user remove or disable the program as soon as feasible (if the consent was based on an inaccurate description of the program's material elements).

For convenient reference, a compliance flowchart depicting the main elements of CASL's computer program rules is attached as Appendix A.

Similarities to Anti-spam Rules

Many CASL concepts that apply to CEMs also apply to the computer program rules. For example:

  • Consents cannot be bundled either with general terms and conditions or with other consent requests. There must be separate ways to consent (or not) to computer program installation and to the receipt of CEMs.
  • Consents cannot be pre-toggled, but as per CRTC regulatory guidance must be obtained through an opt-in mechanism.
  • The person relying on consent has the burden of demonstrating that consent if there is a complaint. Accordingly, prudence dictates that persons installing computer programs subject to CASL implement policies addressing the proper documentation of recipient consent for any programs that are installed.
  • Directors and officers can be personally liable for their corporation's CASL breaches, and employers can be liable for breaches by employees acting in the scope of their employment. Due diligence defences are available in all these circumstances.
  • It is prohibited to aid, induce, procure or cause to be procured a violation of the rules.
  • Penalties for breaches are up to $1 million for individuals and up to $10 million for businesses. And as of July 1, 2017, the private right of action will be available to those who believe they have been affected by a breach of CASL's software provisions.

Current Uncertainty and Pending Guidance

There is current uncertainty about what CASL's computer program rules actually mean and how they will be applied and enforced. For example, what does "install or cause to be installed" mean in the context of a mobile application store – is the app installed by the end customer, or by the developer/publisher, or by the app store provider? And who is responsible for complying with the computer program requirements? What about programs that are pre-installed on a computer or mobile device? Is firmware covered and, if so, how do vendors address disclosure and consent?

The CRTC has indicated that it will provide further guidance around CASL's computer program rules in mid-November. We are optimistic that the guidance will provide some much-needed clarity around CASL's computer program rules ... although there will be little time between the guidance and those rules coming into force.

Start Preparing Now for New CASL Computer Program Provisions

Many organizations have understandably been focussed on interpreting and complying with CASL's anti-spam requirements. But organizations that provide software, or products with embedded software, should turn their minds to CASL's computer program provisions sooner rather than later, given that those provisions will apply as of January 15, 2015.

Unfortunately, as with the anti-spam rules, the computer program provisions are broadly-worded and often unclear – and of course bring the same significant penalties for non-compliance. This means that until there is further guidance from the CRTC, providing practical advice on CASL's computer program installation rules will continue to pose significant challenges.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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