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Canada Won't do a Utah, Says Expert

By Ken Magill

In a move that has set off alarms in the American email marketing industry, Canada looks poised to pass an anti-spam law that includes the right for individuals to sue commercial emailers.

Some observers—including this writer—have predicted that Canada’s inclusion of a private right of action in its anti-spam law will result in a slew of frivolous lawsuits, as happened in Utah after it passed a law giving individuals the right to sue alleged spammers.

In 2003, Salt Lake attorneys Denver Snuffer and Jason Riddle filed more than 1,000 cases against companies such as eBay, Verizon and Columbia House in a massive shakedown effort before the law was repealed.

However, there is good reason to believe Canada’s anti-spam law will not turn out to be the litigation-mill creator Utah’s was, according to at least one expert.

Canada’s court system has a loser-pays provision where the losing side of a lawsuit can expect to pay at least some portion of the winner’s court costs. Loser-pays provisions—which the U.S. court system lacks—tend to have a chilling effect on frivolous suits.

“I’ve had discussions with people in the U.S. about this [Canada’s proposed anti-spam law] and a lot of them point to Utah where things just got completely out of control,” said Shaun Brown, an attorney with the Law Office of Kris Klein in Ottawa, CA, a firm that specializes in Internet-related issues. “That’s a fair concern to have, but the loser-pays rule goes a long way in Canada. We just don’t have the litigation industry in Canada like you do in the U.S.

“I would even go so far as to say that the rules here in many cases discourage legitimate claims,” Brown said. “A lot of claims that should be brought to court here just don’t happen because people can’t afford it and they’re too afraid of the consequences of losing.”

 He added that courts in Canada can also impose extra costs on litigants and lawyers who are deemed to be bringing frivolous lawsuits.

“You have to think long and hard before you sue somebody here,” Brown said. He also said courts in Canada don’t have much patience for litigation mills.

“If the court thinks it’s a legitimate business trying to do the right thing and you’re just trying to make money, you’re not going to get very far.”

However, none of this is to say American marketers shouldn’t be concerned with Canada’s anti-spam law once it presumably passes.

For one thing, it can be difficult to tell where an email address holder is located.

“In many cases, it’s hard to know with certainty you’re not sending to Canadians,” said Brown. “Potentially, a lot of U.S. companies could be caught by the Canadian law. The way the law is worded, the jurisdiction is pretty broad.”

Anyone sending commercial email from Canada or to someone in Canada will be subject to the Fighting Internet and Wireless Spam Act, or FISA.

FISA requires marketers to get permission, either implied or expressed, before sending commercial email to Canadians.

Consent can be implied by an existing business relationship, where the recipient has published their email address prominently or where the recipient has provided their email address directly to the sender.

FISA will also require marketers to identify themselves, to indicate on whose behalf the message is sent, and provide current contact information and a functioning unsubscribe mechanism.

FISA will require marketers to honor unsubscribes within 10 business days.

Penalties can be as high as $1 million per violation for individuals and $10 million per violation for companies.

However, FISA contains provisions to help protect companies that are honestly trying to abide by the law but make mistakes.

“While they [Canadian lawmakers] put in high penalties to punish the really egregious spammers, they tried to balance that by providing a lot of discretion for legitimate businesses,” said Brown. “It [FISA] provides businesses with a lot of leeway.”

Author’s Note: I have predicted a number of times that Canada’s inclusion of a private right of action in its anti-spam law would be a disaster. This was before I was aware Canadian courts have a loser-pays provision. [Self-righteous alarmism coupled with ignorance is one of my finest qualities, no?] Consider this article a public admission I was probably dead wrong.

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