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October 23, 2014

Guest post by Amy Reier
(Brownell & Reier)

High-Technology companies and other businesses and their lawyers need to be aware of important changes to Canadian and International laws on competition, privacy, security and IP dealing with trade associations and other business ventures. New laws on competition, privacy, anti-spam, anti-corruption and bribery require businesses to abide by strict regulations or risk facing civil actions or criminal charges. Due diligence and compliance are important at the start-up of any business venture.

For example, it now is far easier for the Competition Bureau to convict a person for conspiring to fix prices or bid-rigging within a trade association, joint venture or a corporate alliance.  They also regulate cartels, abuses of a dominant position in the marketplace and deceptive advertising. In some cases, a company director may face a penalty of a fine not exceeding $25 million/count and/or 15 years in prison, depending on whether or not they proceed under the civil or criminal provisions of the Competition Act. There are also civil actions available here.

The new anti-spam laws also are being governed by the Competition Bureau, the Privacy Office and the CRTC. It requires businesses to obtain strict opt-in consents from potential customers to receive electronic messages as of July, 2014. Despite the mention of a few possible investigations, there seems to be a large number of complaints and no charges being laid in Canada (at least at this point). Private civil actions under these same laws will also be available in July 2017. Other countries have introduced similar laws. As of January 15, 2017, Canada will also begin targeting software companies and the installation of software. While aimed at combating malware, spyware and cyber crimes, it will affect all software companies.

Anti-corruption and bribery requirements also are receiving increased attention, while many countries still fall far behind in these areas. To meet its international obligations, the Corruption of Foreign Officials Act (CFPOA) is now being pursued more aggressively in Canada. There has been an increase in the number of investigations and criminal charges or private actions against directors where there is evidence of corrupt business practices. The penalties here are also high fines or up to 14 years in prison for an individual.

There is recent outcry about privacy and social networking and security and data privacy breaches. Protective measures must be put in place to protect client information, despite the immediate threat of hackers. Directors can be held liable for actions of its business partners in other countries as happened in the Target case earlier this year.

Canada’s Competition Bureau and the Canadian Intellectual Property Office (CIPO) share a memorandum of understanding allowing for increased cooperation and the sharing of information between one another, and on an international level. In September 2014, the Competition Bureau released its updated Intellectual Property Enforcement Guidelines (IPEGs), which deal with the changing legal interface between IP and Competition laws.   They explain how a business arrangement or joint venture might abuse its collective or personal IP rights to trigger charges under the civil or criminal provisions of the Competition Act.

The IPEGs continue to be discussed between the public and the Competition Bureau and the CIPO. There is a global trend emerging among countries toward using their competition authorities to regulate the internet, or legally re-act to the speed of innovation. There are differing laws with respect to competition and IP in other countries, which also can be problematic for the small firm seeking to conduct international business.

There are key benefits to working within trade associations, joint ventures, or R&D joint ventures or other business affiliations. Many trade associations play a key role in developing compliance and innovation strategies or improving the laws themselves or to encourage innovation within our community. Joint ventures and corporate alliances are necessary for businesses for other reasons. Multi-disciplinary teams involving government, education, legal and private enterprise often are necessary to promote innovation and to secure long-term benefits.

The differing approaches to IP in various countries, the emergence of new trade agreements, the enforcement of one’s own or collective IP rights, the enforcement of foreign judgments, civil remedies and increased international arbitration and disputes are all matters to consider. Many of these legal issues must be dealt with by young start-up companies at the outset to ensure long-term local and global success.

I encourage young companies starting out to take advantage of the Intellectual Property Law Clinics at some of the Law Universities, such as the one offered this past summer at the IP Law Clinic at CIGI in Waterloo organized by CIGI International Law Research Program, Communitech, Bereskin & Parr, Miller Thomson and Phillips Lytle. Some other Canadian Law Firms and International Legal Groups offer pro-bono legal services and work-shops or reduced legal fees for start-up companies.

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Our experience includes advising clients in Toronto, across Canada and the United States on the application of Canadian competition and regulatory laws and we have worked on hundreds of domestic and cross-border competition, advertising and marketing, promotional contest (sweepstakes), conspiracy (cartel), abuse of dominance, compliance, refusal to deal and pricing and distribution matters. For more information about our competition and advertising law services see: competition law services.

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