SCC Leaves Digital Laws Vulnerable
by Julius Melnitzer

The Supreme Court of Canada's December decision declaring unconstitutional the federal government's scheme for a national securities regulator (NSR) has cast a shadow on the validity of federal privacy, digital and copyright laws.

The Supreme Court ruled that the proposed NSR legislation did not fall within the federal trade and commerce power. Rather, the court reasoned, because contractual matters were the primary object of securities regulation, “these matters remain essentially provincial concerns falling within property and civil rights in the provinces and are not related to trade as a whole.”

Because the private-sector privacy law (the Personal Information Protection and Electronic Documents Act) and the new anti-spam legislation both rely on the trade and commerce power, observers are speculating that they too may be vulnerable to constitutional attack.

“There have always been constitutional concerns about PIPEDA,” says Barbara McIsaac in Borden Ladner Gervais LLP's Ottawa office. “Clearly the securities decision raises questions insofar as the legislation purports to deal with the collection, use and disclosure of personal information within a province that has not enacted similar legislation.”

But McIsaac says there's an important difference between PIPEDA and the fallen securities scheme. “PIPEDA allows provinces to opt out by enacting their own privacy legislation, which is not the way the securities regime was supposed to work,” she says.

Mark Hayes of Toronto's Hayes eLaw LLP says the Supreme Court was not impressed with the way the federal government went about the securities legislation. “Basically, the federal government told the provinces that it was taking over securities regulation,” he says. “And while the legislation allowed the provinces to have their own regime, everyone knew that no one would use a provincial statute if they could resort to a national securities regulator.”

As for the anti-spam legislation, McIsaac believes that it's on firmer ground than the privacy legislation. “There are probably fewer open questions with regard to the anti-spam because the government has structured the law to be within the ambit of the CRTC, which clearly has jurisdiction over the Internet,” she says. “That's analogous to the way the Competition Bureau has jurisdiction over misleading advertising.”

The fact remains, however, that the provinces, who have legislated extensively in the securities field, haven't done anything in the anti-spam arena. “Where there's no provincial legislation, the Supreme Court isn't as likely to reach the conclusion that the legislation is unconstitutional simply because some aspects of it trench on property and civil rights,” Hayes says. There's also the argument that jurisdiction over anti-spam matters shouldn't be bifurcated because so much spam originates internationally.

Finally, some questions have been raised about various aspects of the amendments to the Copyright Act, especially the digital-lock provisions, despite the fact that the federal government has exclusive jurisdiction over copyright.

“The argument is that the digital-lock provisions protect things like certain kinds of data and materials in the public domain, where copyright infringement is not an issue,” Hayes explains. “But again, because the provinces haven't expressed any interest in dealing with the subject and don't appear interested in it, I doubt that the Supreme Court will say that the feds are precluded from dealing with it.”

Julius Melnitzer is a legal-affairs writer and regular contributor to Lexpert.