Canada Updates its Competition Act

I recently became aware of changes to the Canadian Competition Act (the Act) meant to modernize this piece of legislation, including to give it a little more teeth.

The changes at issue include the following, in case you hadn’t been following this (I hadn’t):

  • The act now prohibits “drip-pricing” by on-line retailers, as it may be tantamount to false (or misleading) advertising. This is familiar to anyone who has shopped on-line where you may be drawn to a particular source offering a what seems like a good deal, until you go through the whole process and realize fees and costs are successively tacked on, so that you end-up with a price that is substantially more than the “price” that attracted you in the first place.
  • Speaking of false (or misleading) advertising, the recent changes to the Act now allow courts to impose penalties that are no longer limited to fixed (capped) amounts. From now on, whenever a judge must impose a penalty on a given business for this, (s)he may elect to set the penalty according either to what profit the business derived from its misdeed, or better yet, on a percentage (3%) of its annual global revenue. Do I have your attention now?
  • Likewise, the recent changes also remove the cap on competition-related criminal penalties, instead providing that judges now have discretion under the Act as to the amount of penalties imposed on wrongdoers.
  • Anti-poaching agreements between employers are now a big no-no, as an unacceptable constraint on the working conditions of Canadian employees by what amounts to a form of cartel. As to this, one has to admit, if you allow business to agree between them to refrain from hiring from competitors, you’re seriously limiting the prospects of employees working in that industry.

The changes at issue came into effect on June 22, 2022.

Canadian Court Cancels Trademark Registration Obtained in Bad Faith -a First

The 2019 changes to the Trademarks Act (the “TMA”) introduced a requirement that trademark applicants not file applications (nor obtain registrations) in “bad faith”. Though this has been part of Canadian trademark law for nearly 3 years, courts had yet to use the provision empowering them to cancel a trademark registration obtained in bad faith. This has now changed, thanks to a recent decision by the Federal Court, in Beijing Judian Restaurant Co. Ltd. v. Meng (2022 FC 743).

The case at issue basically stems from an individual becoming aware of a well known trademark, as used in China for restaurant services, and managing to secure a registration for that mark, before the actual owner really brought the mark to Canada. Yep, this is a story of good old fashion trademark piracy.

Fortunately for the good guys, given the 2019 additions to the TMA, brand owners now have a new tool with which to combat such high-handed attempts to squeeze and essentially defraud them. If they are reasonably quick, the first thing they can do, once a fraudulent application is advertised in Canada, is to oppose the application, based on the new ground of bad faith. Alternatively, if they fail to oppose and the mark actually gets registered by the bad guys, the real owner may attack the resulting registration, by relying on paragraph 18(1)(e) of the TMA, which now allows for cancellation of any registration that resulted from an application filed in bad faith.

In the case at issue, Mr. Meng filed the application at issue along with about 20 other applications reproducing famous marks relating to restaurants. Then, after securing actual registration, he contacted the legitimate Chinese business’ partners in Canada, and initiated what can only be described as a shakedown. Basically: you pay me or I sue you in Canada to stop your (legitimate) operations, because I now own a trademark registration for your mark -Ha ha ha [insert cartoon villain evil laugh here].

Well, too bad for this genius extortionist (alleged, should I say, right?), the TMA now allows us to cancel registrations like these, which is exactly what the real owner did, after refusing to pay the ransom, err, I mean the “price” which Mr. Meng asked for.

Given the portfolio of clearly fraudulent applications in his name and a request for 1.5 Millions dollars from this trademark pirate, the court had little difficulty finding bad faith here. Consequently, it ordered cancellation of the registration at issue.

As a result, we (at least) now have a first case of jurisprudence confirming that, yes, in clear cases of crass registration and extortion attempts, the new provisions of the TMA as to bad faith may be used to cancel a registration outright. As to other cases where facts will be less clear-cut, we’ll just have to see, including all eventual cases where pirates are not stupid enough to demand money outright and/or file tens of fraudulent applications in their own names.

For now, let’s just call it progress, and not dwell too much on the fact that this kind of situation now exists partly because the Canadian legislator, in its infinite wisdom, decided to do away with most rules relating to actual use, to file and register trademarks.

Canada Aiming at Improving Cybersecurity of Federally Regulated Industries Through Bill C-26

Canada recently started looking at a new piece of legislation that seeks to strengthen cybersecurity of businesses and organizations the activities of which fall within ambit of activities that the Federal government can directly regulate.

Interestingly, contrary to most Canadian legislation so far and that touch upon cybersecurity, the focus this time is not on whether an organization collects, uses or discloses personal information. Rather, the bill at issue would seek to cover whole swats of certain industries, whether the organizations operating therein do or do not deal with personal information. This is a new approach in Canada which may signify that the government is finally realizing we collectively need to take cybersecurity more seriously, and that it is more than an issue of personal information.

Bill C-26 proposes to impose on telecommunication providers a new regime that would force them to adopt better cybersecurity practices, with a view to better protecting Canadians who rely on their services for things like cell phone and Internet services.

More generally, the bill would also empower the Canadian government to force federally regulated businesses to clean-up their act (so to speak), cybersecurity-wise, especially when it may jeopardize national security or public safety. As you may know, in Canada, federally regulated businesses include, for example, those who deal with:

  • radio, television and telecommunications, such as Internet providers;
  • air transportation, including airlines, airports, ports, shipping, boats, as well as railways and road transportation services that cross borders;
  • banks;
  • certain energies and their transport, like pipelines, etc.

Bill C-26 would allow the Federal government to require organizations operating in those areas to take cybersecurity more seriously, in particular when public safety may be involved. For example, this may allow the government to dictate that operators of pipelines better protect and monitor their computer systems, with a view to avoiding major catastrophes that may eventually result from cyber-attacks.

In addition to eventually requiring organizations in those industries to adopt and apply cybersecurity programs and to better protect their systems, C-26 would also require the organizations at issue to report eventual cybersecurity breaches, something they currently are not generally required to do.

Bill C-26 is currently at the First Reading stage.