Canada: Technology Law Highlights: 2017 Year In Review

2017 was an eventful year in technology law both in Canada and abroad. From a surprise late reprieve from the year's most anxiously anticipated anti-spam legislative provisions to a decision from the country's top court upholding a Canadian-issued global order against Google, legislators, regulators and the courts made moves with important implications for technology lawyers, companies and departments in the course of the year.

Here, in no particular order, are some of the year's highlights as chronicled by McCarthy Tétrault's bloggers:

  • Cryptocurrency and ICO generates hype—and backlash – 2017 was the year "Bitcoin" entered both household usage and investment portfolios more widely than ever before. Starting the year trading at over USD $1000 for the first time since January 2014, Bitoin went on to surge to a high of over USD $19,000 on December 17, 2017, only to end the year back down under USD $14,000. With the price surge and growing popularity came increased regulatory scrutiny of both cryptocurrencies and the rapidly proliferating use of initial coin offerings ("ICOs"), with the Canadian Securities Administrators, U.S. Securities and Exchange Commission ("SEC") and UK Financial Conduct Authority, among many others, releasing statements and guidelines on cryptocurrencies and ICOs. Despite this scrutiny, ICOs and cryptocurrencies also saw increased legitimacy, with the Ontario Securities Commission approving its first ICO and the British Columbia Securities Commission announcing the first registration of an investment fund manager in Canada dedicated solely to cryptocurrency investments.
  • Supreme Court of Canada upholds worldwide de-indexing order – In a landmark decision that made waves worldwide, the Supreme Court of Canada (SCC) in Google Inc. v. Equustek Solutions Inc. ruled that a Canadian common law court had the jurisdiction to make a global search engine de-indexing order against Google.
  • SCC refuses to enforce Facebook forum selection clause – In Douez v. Facebook, Inc., the SCC found the forum selection clause in Facebook, Inc.'s terms of service valid, but found "strong cause" not to enforce it due to the power imbalance between the end user and Facebook in this unilaterally imposed contract and the "quasi-constitutional" nature of the Privacy Act (British Columbia).
  • Canadian Government delays CASL private rights of action – Just weeks before July 1, 2017, the date on which the private right of action under Canada's anti-spam law ("CASL") was scheduled to come into force, the Canadian government granted welcome relief by suspending the implementation of the private right of action provisions of CASL in response to concerns raised by businesses, charities and the not-for-profit sector. The provisions would have permitted lawsuits alleging violations of the legislation to be filed against organizations and individuals, including for certain Competition Act violations. The Government instead asked a parliamentary committee to review the legislation.
  • Ontario court rejects information location tool and fair dealing copyright defences – In Trader v. CarGurus, the Ontario Supreme Court awarded statutory damages of $305,604 against CarGurus for copyright infringements in its unauthorized use of Trader's car images. The Court found that even those photographs that were merely "framed" on CarGurus' website were still being "made available" by CarGurus to the public by telecommunication—whether or not these images were hosted on its servers was not relevant. It also rejected both CarGurus' fair dealing defence and its attempt to use the new defence for "information location tools" (search engines), finding that the latter defence only applies to intermediaries that enable users to "locate information that is available through the Internet", not to service providers that gather information online and then make it available on their own websites.
  • Blockchain technology makes its mark – 2017 marked a number of interesting developments for blockchain/distributed ledger technology (DLT) worldwide. Amendments to the influential Delaware General Corporation Law were proposed (and later passed) that enable corporations to use blockchain technology to create and manage corporate records. In Canada, the Bank of Canada experimented with a blockchain-based wholesale payment system with its "Project Jasper" but found that the technology was " not there yet". The Ontario Securities Commission also issed a caution that products and other assets tracked and traded on DLT may be securities caught by applicable legislation, even if they do not represent shares of a company or ownership of an entity. Further afield, the Australian Securities and Investments Commission release guidance on the use of DLT for licensed companies and start-ups.
  • Canada's Federal Court interprets TPM provisions – In Nintendo of America Inc. v. King & Go Cyber Shopping (2005) Ltd., the first decision interpreting provisions offering legal protection to technological protection measures (TPMs) introduced under Canada's Copyright Modernization Act, Canada's federal court demonstrated that businesses circumventing TPMs on a significant scale will not be tolerated, awarding $12.7 million in statutory and punitive damages plus costs and interest against Go Cyber, which had offered devices designed to circumvent Nintendo TPMs.
  • CRTC clarifies regulatory principles governing mobile virtual network operators (MVNOs) – In a decision against Sugar Mobile Inc., the Canadian Radio-television and Telecommunications Commission (CRTC) confirmed that moves to regulate wireless roaming in Canada do not require incumbents to support competitive business models based on "permanent" roaming, finding that an MVNO's customers are subject to the same limitations that apply to other customers of the wholesale provider. Earlier in 2017, the CRTC also imposed new direct regulatory obligations on resellers of telecommunication services.
  • Increased regulatory focus on Fintech – Financial technology ("Fintech") was an area of continued dynamic growth in 2017. This growth has not been missed by regulators, leading to a number of important Fintech regulatory developments in the course of the year.
  • Important developments in patent litigation – 2017 was also an eventful year for patent litigation. Watch for our summary of the year's most important patent litigation cases and developments, coming soon!

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