Canada: Demystified: USMCA's Digital Trade Provisions On ISP Liability In Canada

The United States–Mexico–Canada Agreement's (USMCA) digital trade provisions have attracted significant attention over their perceived impact on the Canadian legal and business landscape, especially around the implication that Canadian web platforms may not be liable for the content posted by third parties. However, the importation of these concepts from the United States may not have as significant an effect as first imagined.

USMCA PROVISIONS

Article 19.17.2 of the USMCA closely mirrors section 230(c)(1) of the U.S. Communications Decency Act (CDA), which prohibits parties from treating internet platforms "as the publisher or speaker of any information provided" by their users.

The USMCA states: "no Party shall adopt or maintain measures that treat a supplier or user of an interactive computer service as an information content provider…except to the extent the supplier or user has…created, or developed the information."

Commentators have suggested that this language will result in Canadian Internet service providers (ISPs) and Internet platforms receiving broad immunity from liability for the content posted by their users.

However, it is unclear from the text of the USMCA that this will be the case. Rather, the scope of ISP immunity will depend on the enabling legislation adopted by Parliament, as well as courts' interpretation of the immunity.

ISP immunity in Canada may simply develop in line with current Canadian law (which provides immunity only if ISPs are truly passive instrumental intermediaries), resulting in little to no departure from the current Canadian approach.

A CLOSER LOOK AT THE CDA

U.S. Congress enacted section 230(c)(1) of the CDA in reaction to early Internet decisions in which web platforms were held to be liable for defamatory content posted by individual users of the platforms.

Section 230(c)(1) intended to limit liability for intermediaries from litigation arising from the content posted by their users, with the exception of content attracting federal criminal liability or intellectual property claims. Accordingly, the provision states that no provider of an "interactive computer service" (ICS) shall be treated as the publisher or speaker of any information provided by another "information content provider" (ICP).

An ICS is an information service, system or access software provider that enables computer access by multiple users to a computer server. The term may include ISPs, web hosts, search engines, and other website providers. An ICS does not enjoy immunity for content that it wholly or partially creates or for which it is responsible.

An ICP is a person who is wholly or partially responsible for the creation or development of information provided through the Internet.

Currently, section 230(c)(1) provides broad and robust immunity from lawsuits for ISPs and other service providers. While the text of this section is limited to prohibiting the treatment of a web host as a creator or speaker of content, U.S. courts have interpreted it broadly to effectively provide ICSs with immunity from litigation arising from the content posted by their users. This immunity is in contrast to the liability faced by traditional publishers and distributors of information, such as newspapers and television stations.

Unlike ICSs, traditional information distributors can be held liable for publishing or broadcasting harmful or otherwise tortious content that they do not create.

While eligibility for immunity under section 230(c)(1) is broad, it depends on the source of the information and the role an ICS plays in displaying that information.

If a website passively displays content that is created entirely by third parties, the CDA protects the website operator from liability that would otherwise apply because of such publication, including in cases alleging defamation, fraudulent and negligent misstatement, misleading advertising, sale of defective or inauthentic goods, and other torts.

Immunity is generally available where the ICS restricts its activities to traditional editorial functions or merely forwards content without making a material contribution, even where the website enhances the visibility of a post or the prominence of a webpage in a search engine result. Immunity is also available to website users who post content from another source.

However, immunity is unavailable where the ICS is partially responsible for the development of the content. For example, a website that pays contributors or encourages (and even requires) certain types of content may not be eligible for section 230(c)(1) immunity, if its role in encouraging content rises to the level of partial responsibility for its creation.

ICS immunity from litigation has generated criticism where the ICS displayed content that is harassing or offensive, such as false news, revenge pornography or advertisements for prostitution. In response, Congress recently enacted legislation to limit section 230(c)(1) immunity for websites that allegedly host advertising related to sex trafficking.

It is the expansive and robust immunity provided to ICSs that has generated concern about the importation of section 230(c)(1) principles to Canada, through Article 19.17.2 of the USMCA. However, ICS immunity in Canada may not necessarily develop to be as broad as in the United States.

DEVELOPMENT OF IMMUNITY FOR ISPs IN CANADA

Since the USMCA language is similar to that of the CDA, many commentators concluded that Parliament's implementation of the USMCA would result in broad CDA-style immunity for Canadian ISPs.

However, as noted above, the expansive immunity provided by the CDA is not due to the language of the provision or the intent of Congress. Rather, the immunity currently provided by section 230(c)(1) is the product of extensive and broad judicial interpretation of the provision by U.S. courts.

While Article 19.17.2 of the USMCA imports principles similar to those of section 230(c)(1), it does not necessarily import the judicial interpretations of those principles, which has resulted in the broad immunity provided in the U.S. to websites, search engines, ISPs, and service providers.

While the USMCA requires signatories to refrain from establishing or maintaining rules that treat service providers as content creators, it does not require parties to take the same expansive approach to immunity as was taken in the United States, nor does the text of Article 19.17.2 incorporate the broad immunity formulated by American courts.

Therefore, when Parliament enacts legislation to implement the USMCA generally, and the principles of Article 19.17.2 specifically, it is only obligated to ensure that a service provider is not treated as a content creator for the purpose of determining liability arising from users' posts.

Parliament may establish or maintain laws that hold a service provider otherwise liable for users' posts as a distributor of content, as long as those laws do not hold service providers liable as content creators — this distinction between content creators and distributors is not a new concept for Canadian service providers. Canadian statutes such as the Copyright Act already recognize this distinction. Moreover, existing common law holds service providers liable as distributors and not as content creators.

Current Canadian law holds that web platforms can be liable as distributors of content if they knew of infringing or otherwise illegal content posted by users.

In SOCAN v. Canadian Assn. of Internet Providers, the Supreme Court of Canada (SCC) echoed the principles of the European E-Commerce Directive. It recognized that ISPs acting as passive intermediaries or "conduits" are not generally liable for copyright infringement when they are merely hosts for others' infringement, but could become liable if they do not take action once given notice of an infringement.

Further, in Crookes v. Newton, the SCC also acknowledged developments in the law that made a distinction between passive hosting and knowing distribution of harmful content.

Therefore, existing Canadian law, which holds ISPs liable for the content posted by their users without treating them as content creators, does not violate the USMCA's requirement that Parliament refrain from "establishing or maintaining measures" that treat service providers as content creators. Accordingly, Parliament is entitled to maintain the current Canadian approach to the liability of service providers arising from the content of their users' posts.

TAKEAWAY

While Article 19.17.2 of the USMCA closely tracks the language of section 230(c)(1) of the CDA, Parliament is not obligated to import the principles and interpretations of the CDA into Canadian law. It remains to be seen how Canadian law will develop and whether Parliament chooses to voluntarily depart from current Canadian principles in favour of the broad immunity developed in the United States.

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