Canada: Guide To Doing Business In Canada: Advertising & Marketing

Last Updated: November 14 2016
Article by Gowling WLG

Advertising & marketing

With a well-educated population, a vibrant media industry, and relatively clear regulations related to advertising and promotions, Canadians produce some of the best advertising creative in the world.

However, foreign advertisers should be aware of the unique aspects of Canadian law and culture that govern advertising in Canada. For example, in the province of Québec, language laws mandate equal prominence of French on all packaging, product warnings and instructions, and greater prominence of French at point-of-sale and, in many circumstances, in advertising and pro­motions. This requirement reduces the amount of space available to advertisers, especially in the case of packaging for national products.

1. Packaging and labelling

All prepackaged products sold in Canada are governed by a series of federal packaging and labelling regulations. In order to protect consumers from false claims and harmful or potentially harmful products, certain items — including food and beverage, natural health, tobacco, cosmetic products and consumer chemical products, among others — are subject to more stringent labelling requirements.

Federal packaging laws also stip­ulate that basic information on all products be provided in both French and English — although, outside of Québec, prominence of any particular language is not mandated. Certain foreign-made products sold in Canada also require country-of-origin identification under the Marking of Imported Goods Order.

2. "Product of Canada" and "made in Canada" claims

The Competition Bureau has published a number of enforcement guidelines to help industry professionals and advertisers comply with legislation prohibiting false and misleading advertising — such as the federal Competition Act. One such set of guidelines addresses "product of Can­ada" and "made in Canada" claims. Under these guide­lines, for a product to be represented as a "product of Canada," its last substantial transformation must have occurred in Canada and at least 98 per cent of the total direct costs of production must have been incurred in the country.

For a "made in Canada" claim, in addition to Canada being the location of the product's last substantial transformation, at least 51 per cent of the total production costs must have been incurred there. A "made in Canada" claim must also be accompanied by a qualifying statement disclosing the presence of foreign content — e.g., "made in Canada with imported parts," or "made in Canada with domestic and imported parts."

3. IP and copyright

Under the federal Copyright Act, songs, logos and, in some cases, even slogans used in Canadian advertisements are protected by copyright. The Copyright Act has been amended recently to allow fair dealing with such works for the purpose of parody or satire, but the extent to which these defences will apply in a commer­cial or comparative advertising context is not yet certain.

The use of competitors' registeredmarks and logos in com­parative advertising may give rise to additional concerns under Canadian trademark law. For example, while in the United States, use of a competitor's trademark in truthful and non-deceptive comparative advertising is generally legal, in Canada, use of competitors' registeredmarks or logos — even in a fair and accurate comparative advertising context — may, in certain circumstances, be actionable as an unlawful depreciation of the goodwill associated with the registered mark or logo.

The Canadian Intellectual Property Office maintains a database of registered and pending trademarks, and does not allow registration of confusing or similar marks. For a more detailed discussion of the protection and use of IP in Canada, see the "Intellectual property" chapter.

Under Québec law, any "inscription" on a product, as well as signs and commercial advertising, must be in the French language. The legislation provides an exception, however, for "recognized" trademarks within the meaning of the Trademarks Act — unless a French version has been registered.

For many years, retailers in Qué­bec had relied on the "recognized" trademark exception to display English-only trademarks on public signs, posters and commercial advertising. This position became the subject of court proceedings when the Qué­bec regulator — the Office of French language (the Office) — began a series of highly publicized enforcement actions against a number of retailers using English-only signage, on the basis that the exception does not apply to commercial signage.

According to the Office, English-only trademarks used to designate business names on commercial signage in Québec were required to be accompanied by a French generic descriptor, phrase or expression. The retailers launched a court challenge that ultimately made its way to the Québec Court of Appeal, who ruled in favour of the retailers — concluding that they could rely on the "recognized" trademark exception, and were not required to add French descriptors to their non-French trademarks on storefront signage.

However, in May 2016, the Québec government published its proposed amendments to the French language regulations in an effort to ensure visibility of the language throughout the province. The draft regulations will affect all companies with an establishment in Québec that display a non-French trademark in the absence of a French generic term, slogan or description outside their premises.

The draft regulations provide that where a non-French trademark is displayed outside a building, a "sufficient presence of French" must also be ensured in one of three ways: (i) a French generic term or description of the products and/or services concerned, (ii) a French slogan or (iii) any other term or indication — although preference should be given to the display of information pertaining to the products and/or services to the benefit of consumers or persons frequenting the site. The draft regulations further require the French generic terms, slogan or other description to be permanently visible and shown in the same visual field as that of the sign or poster bearing the non-French trademark.

4. Environmental claims

Among the enforcement guidelines issued by the Com­petition Bureau, as noted previously, are guidelines on the use of environmental claims in advertising. Published by the Bureau in conjunction with the Canadian Standards Association, these guidelines discourage the use of unsubstantiated and vague environmental claims — such as "eco-friendly" and "environmentally friendly" — stating that such claims may only be used if they detail the exact environmental benefit in such a way that it can be verified in relation to the specific product.

Through the use of commentary and practical examples, the guide­lines provide instruction on the proper use of certain common environmental claims and symbols. "Green" marketers in Canada must ensure that all environmental claims are true — not only in relation to the final prod­uct, but also in relation to all relevant aspects of the product's life cycle (i.e., there must be an overall net positive impact on the environment).

5. Contests and promotions

The legal rules that govern contests and promotions in Canada contain a number of unique provisions. "Lotteries" — i.e., any scheme that awards a prize based on chance and/or where money (or another valuable "consideration") is paid to participate — are illegal under the Criminal Code.

To avoid being considered an illegal lottery, a contest must include a skill-testing ele­ment — commonly a mathematical question — and generally must provide a no-purchase entry option. The Competi­tion Act also mandates disclosure of certain material information about the contest, including any regional allocation of prizes, odds of winning and prize values.

Special considerations also apply for con­tests open to Québec residents. In addition to its French language rules for advertising, Québec is currently the only juris­diction in Canada that imposes payment of duties and requires certain pre- and post-contest filings for contests open to its residents.

6. "Sale" claims

In order to advertise a "sale" price in Canada, you must have established a "regular" price at which either (i) a substantial number — i.e., more than 50 per cent — of the items have been sold during the relevant time frame (known as the "volume test"), or (ii) the item has been, or will be, offered for sale in good faith for a substantial period of time — i.e., more than 50 per cent of the rele­vant period (known as the "time test").

Even if the term "regular price" is not used, any higher price referenced directly or indirectly in a "sale" advertisement will be considered the "regular price" of the product or service in question. If this amount is not identified as the seller's own regular price, it will be considered to be the price that other sellers in the market generally charge for the same product or service.

Due to the difficulty of predicting the volume of "regular price" sales of any product or service, most retailers in Canada do not rely on the volume test. Instead, they typically use the time test, in which they keep track of the length of time that each item is offered at a price lower than the ordinary selling price, and ensure that this "on sale" period is less than half of the relevant period. The relevant period can be a six-month, 12-month or even a quarterly period, pro­vided that the items are not seasonal and that the time period is followed consistently.

7. Puffery and hyperbole

In Canada, the scope for arguing that an advertising claim is just "puffery" — a hyperbolic boast, or a vague and purely self-congratulatory statement of opinion — is probably narrower than in certain other jurisdictions, the U.S. in particular.

If the claim can be seen as relating to the performance, efficacy or length of life of the product, it cannot be made without substantive evidence of an "adequate and proper test" to support it. As well, if the claim can be interpreted as likely to influ­ence the consumer's purchase decision, in terms of the general impression it creates, it cannot be dismissed as simply "puffery." However, if a claim is so exaggerated or fanciful that no reasonable consumer would ever take it seriously, or if it is clearly expressed solely as a matter of opinion not sub­ject to objective assessment, even Canadians — and our courts — may be prepared to dismiss it as a "mere puff."

8. Canadiana issues

Canadian regulations also extend legal protection to cer­tain symbols and icons of Canada. For example, the use of real or costumed RCMP officers, or the words "Royal Canadian Mounted Police," "RCMP" or "Mountie" in advertising requires consent from the RCMP. Additionally, the use of images of the Canadian flag, the 11-point maple leaf symbol, coins and bank bills in advertising is subject to certain conditions or limitations. However, the national anthem, "O Canada," is in the public domain and is therefore fair game.

9. Advertising in Québec

Beyond the above-mentioned language issues, Québec has a unique culture and heritage, which it has tried to protect through a number of regulations. The most important regulation for foreign advertisers to note is Québec's Consumer Protection Act, as it applies to anyone who advertises or sells products or services to consum­ers in Québec, and imposes strict requirements on the nature and accuracy of advertising. Many Canadian advertisers choose not to open contests to Québec residents due to the additional rules enforced by the province's alcohol and gaming authority, the Régie des alcools, des courses et des jeux. In many cases, national advertisers are forced to make a choice: create parallel advertising campaigns for English and French Canada, or miss out on advertising to the second-most populous Canadian province.

Québec law also prohibits — with limited exceptions — com­mercial advertising directed to children under 13 years of age.

10. Penalties for false and misleading advertising

The Competition Bureau is empowered under the federal Competition Act to pursue administrative remedies in relation to misleading advertising and other deceptive marketing practices. The Bureau also has the ability to prosecute misleading advertising, where misrepresentations are made knowingly and recklessly, as a criminal offence.

In most cases, the Bureau will deal with misleading advertising as a civil offence. This route offers a wide range of enforcement remedies, including cease-and­-desist orders, the required publication of information notices — i.e., corrective advertising — directed to affected parties, and/or administrative monetary penalties.

For a first offence, corporate offenders may face penalties of up to $10 million. For subsequent offences, corporations face up to $15 million in penalties. Under the civil route, the Bureau does not need to prove — as they would in a criminal pro­ceeding — that the false or misleading advertising was engaged in deliberately or recklessly. The potential pen­alties under the criminal provisions include fines and jail.

11. Private remedies for false and misleading advertising

In addition to certain remedies available under the com­mon law — e.g., trade libel — or an action for copyright/trademark infringement, the Competition Act provides a statutory right of civil action for damages suffered as a result of misleading advertising. However, proof that the advertiser acted "knowingly or reck­lessly" is required.

The relevant provision of the Competition Act has also been used as the basis for obtaining injunctions in misleading advertising cases. The basic test for obtain­ing an interlocutory injunction in Canada requires that:

  • There is a serious issue to be tried.
  • The plaintiff will suffer irreparable harm if the injunction isn't granted.
  • The "balance of convenience" favours the plaintiff.

Advertising Standards Canada, the country's main self-regulatory body for the advertising industry, also administers a confidential trade-dispute procedure for compar­ative advertising disputes, which is not unlike the NAD process in the U.S. In the right circumstances, it can offer a lower-cost and relatively expeditious alternative to litigation.

12. Canada's Anti-Spam Legislation

On July 1, 2014, Canada's Anti-Spam Legislation (CASL) came into force, with significant implications for advertisers wishing to promote their goods or services through the use of "commercial electronic messages" (CEMs) sent to an "electronic address" — including email accounts, instant-messaging accounts and other analogous technologies.

CASL prohibits the sending of a CEM to a recipient unless the sender has either the express or implied consent of the recipient to do so — CASL stipulates conditions for obtaining express consent and sets conditions for what will constitute a valid "implied" consent under the legislation. It also imposes certain message disclosure requirements on the sender and requires that recipients are given the ability, at no cost, to unsubscribe from receiving CEMs in future. CASL also amends the Competition Act to make it an offence to send a CEM that is false or misleading in a material respect, or to send or make a false or misleading representation in the sender information, subject matter information, URL or other locator of a CEM.

The Canadian Radio-television and Telecommunications Commission has now begun enforcement of the legislation after being inundated with consumer complaints as soon as it came into force. For a more detailed discussion of the legislation and its requirements, see the chapter on CASL.

13. Digital marketing

From native advertising to behavioural advertising, to new social apps, platforms and tactics, the digital world is constantly evolving and giving rise to complex and unique legal challenges. Unfortunately, Canada is currently lagging behind some other jurisdictions in terms of providing organizations with direct guidance on how to navigate a digital sphere that is littered with legal landmines. That said, there are resources available that help provide valuable insight into digital marketing practices in Canada.

One such resource is the Competition Bureau's Deceptive Marketing Practices Digest, which speaks to issues such as the need to disclose a "material connection," making proper disclosures in digital marketing and how to avoid deceptive practices such as "astroturfing" — commercial representations that masquerade as the authentic experiences and opinions of impartial consumers, such as fake consumer reviews and testimonials. Furthermore, the Office of the Privacy Commissioner of Canada has released its Guidelines on Privacy and Online Behavioural Advertising, which are designed to help organizations involved in online behavioural advertising ensure that their practices are fair, transparent and in compliance with Canadian law.

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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