The Differences Between Canada and the U.S.

in Advertising, Promotions, and Privacy Law

Brenda Pritchard, Gowlings

Jason Gordon, Winston & Strawn LLP

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Canadian and American Advertising Law

Canadian Advertising and Marketing laws have some similarities and some significant differences from those of the United States.

Overview

• Cultural Differences• Copyright and Trade Mark Laws• Right of Publicity• Contests & Sweepstakes• Difficult Provincial Laws• Children’s Advertising• Privacy• Penalties

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Cultural Differences

Canadians are extremely literal

• Puffery is not allowed unless it amounts to hyperbole.• “Canada’s Favourite Coffee” would need to be supported by evidence

that the brand was the number one seller in Canada. • Clearly incredible claims such as “Faster than a

speeding bullet” may be permissible.

• Both the literal meaning and the “general impression” of an advertisement must be accurate.

• Average consumer from Time Case – Credulous and Inexperienced (“From Mensa to Moron”)

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Canadian Specific Issues

Some issues are unique to Canada: • Use of the Canadian Flag - Need consent from

Heritage Canada• O Canada - In the Public Domain• Need consent from the R.C.M.P. to make any

reference to: • “Mounties,” • “The Royal Canadian Mounted

Police,” or• “RCMP.”

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Canadian Specific Issues

Some issues are unique to Canada: • Depiction of Canadian Coins - Need consent from the

Royal Canadian Mint.• Depiction of Paper Currency - Requires license from

Bank of Canada.• Exception to the Counterfeiting Prohibition - A depiction of paper

currency must be less than ¾ or greater than 1½ the length or width or a real bank note

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Canadian Specific Issues

Some issues are unique to Canada:• The terms: “New,” “Introducing,”

or “Improved,” can be used for a

full year from product launch or relaunch.

In United States• “New” may generally be used for only 6 months after

the date a product is launched• Excludes up to six months in test market (not more than

15% of the country)• “Introducing” may generally be used for only 9 months

after the date a product is launched• Standards applied by TV networks

Puffery vs. Claims In the United States

• Puffery: does not require substantiation if:• it is incapable of being proven; or• a reasonable person would not believe or consider to

be material

• “Claim” requiring substantiation is:• a statement which is likely to influence a consumer’s

decision (i.e., a material statement); and• a statement that can be proved or disproved with

objective data (i.e., can be quantified or measured in some way)

• Need to Substantiate Both Express and Implied Claims

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Use of the American Flag

• Federal Statue Prohibits Depicting the Flag (4 U.S.C. § 3)• Misdemeanor • Punishable by a fine not exceeding $100 or by

imprisonment for not more than thirty days, or both, in the discretion of the court.

• This statute is rarely enforced

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Depiction of U.S. Currency

• Counterfeit Detection Act of 1992 (31 C.F.R. 411) permits color depiction of U.S. paper currency if:• Illustration is less than three-fourths or more than

one and one half in linear dimension of each part of the item illustrated

• Illustration must be one-sided• All files are deleted/erased after final use

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Intellectual Property

What to Watch Out For in Canada• Canadian Copyright and Trade-mark law is

fundamentally similar to that of the United States…

…but there are some very important differences to be aware of.

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Intellectual Property

Copyright:

• Comparative Advertising: Showing a competitor’s label can be copyright infringement.

• Copyright assignment must be in writing – therefore, no online assignment, such as by clicking to accept contest rules.

• Term of copyright is the life of the author plus fifty years.

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Intellectual Property

Copyright (cont’d):

• Canada has no equivalent to the Digital Millennium Copyright Act

• A recent amendment to the Copyright Act, introduced an exception for User-Generated Content in s.29.21(1)• But it only applies for non-commercial purposes

Copyright Law in the United States

• No registration required. • Copyright ownership obtained upon “fixation of

a creative work in a tangible medium.” Exclusive right to: reproduce, make derivative works, publicly perform/display, sell or assign rights, and to transmit or distribute.

• Cannot infringe an idea, only the “creative expression” of an idea.

• Protection for life of the creator plus 95 years.

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DMCA

• DMCA: Safe Harbor Protection Under Copyright Law With Copyright Agent Registration and “Takedown” Procedure.

• Not available for: (1) content you create, (2) content you know or have reason to believe is infringing, or (3) where you have a direct financial interest and “right and ability to control.”

•  Need takedown policy and file forms at Copyright Office

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Intellectual Property

Trade-marks:

• Canadian law on the use of competitors' trade-marks is not straightforward:• Whether registered for wares (ie. goods) or services, case

law prohibits the use of competitors' trade-marks on packaging or point of sale materials, but use in a print ad may be ok

• If registered for services, use of a competitor's mark in advertising of any kind may constitute infringement

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Intellectual Property

Trade-marks (cont’d)

• You need to conduct trade-mark clearance searches in Canada.

• “Official marks” can be a road-block. The fact that the businesses aren’t confusingly similar is not relevant.

Canada is a different country, and has a different trade-mark register.

Practice Note: You cannot use ® if not registered in Canada but registered in the US.

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Intellectual Property

Trade-marks and Copyright

• What one can "get away with" in an editorial or on television is not necessarily acceptable in advertising.

Freedom of Speech does not trump Copyright!

U.S. Trademark Law

• No registration required.• Infringement of a trademark occurs where there

is a “likelihood of confusion” among consumers.• Generally only protection with the scope of

services in which the mark is being used and a reasonable zone of expansion.

• Famous marks can be protected outside the scope of services in which the mark is being used.

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Right of Publicity

Some issues are unique to Canada:• Use of Personalities Dead or Alive:

• Glenn Gould Case: suggests that rights of personality exist after death for some indeterminate amount of time, affectionately termed the time before the person is “well-dead”

• Rule of Thumb - person is potentially available for use without the consent of the estate where a person is dead at least 50 years

• Talent Issues:

• There are three unions in Canada • One union is specifically for French Performers (UDA)• Can pay pension and welfare on less than full amount of contract and

no requirement that broadcast be 50%

Right of Publicity in the United States

• Each state has laws prohibiting the use of a person's: (1) name, (2) for commercial purposes, (3) without permission.

• Some state statutes extend rights beyond death, some up to 50 and 100 years.

• Claims may extend beyond name, can include persona, first name, license plates, jersey or player numbers

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Contests

In Canada, the Criminal Code classifies some contests as “Illegal Lotteries”

• Must include an element of skill to avoid being classified as an “illegal lottery”. • Correctly answering a mathematical skill-testing question is sufficient

skill• Remember to use the order of mathematics

• Past cases have concluded: “shooting a turkey from 50 yards” or “naming the prime minister” are not a sufficient test of skill

• However, skill does not take you out of the consideration issue.• Dream Home Case

85 x 15 + 102 – 12 = ?

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Contests

• Canadians call both skill contests and sweepstakes “contests”

• Whether or not you can force a purchase depends on the nature of the contest: • If a prize consists of “goods, wares or merchandise” - No• If a prize is a service or cash and the cost to enter is more than the

prize – Yes

• All instant win type

promotions should have a

“Kraft” clause (like the US)

Contests in Canada:

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Contests

• Contest rules must be printable “online”.• You can’t request more personal information than needed

for contest unless the entrant provides opt-in consent.

• The Contest Rules in Quebec make Florida and New York look tame!

“Personal Information” includes an e-mail address!

Contests in Canada:

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Contests in Quebec

Contests in Quebec or geared to residents of Quebec are regulated by the Régie des alcools, des courses et des jeux

For Contests with a Total Prize Pool > $100:• Duty must be paid – based on total prize value,• Bonds to be posted (for prize pool > $20,000),• Final reports regarding prize delivery.• Rules must be available in French • Contest advertising must be filed in

Quebec and follow the prescribed form

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Contests in Quebec

Contests in Quebec are regulated by the Régie des alcools, des courses et des jeux

The contest rules must include:• The “Régie Clause”, • The number and value of the prizes

and a detailed description of each,• The place, date and precise time the prize

winners will be named, (No “On or About”)• The place, date and deadline for

claiming prizes,• The nature of the skill-testing requirements.

Régie ClauseAny litigation respecting the conduct or organization of a publicity contest may be submitted to the Régie des alcools, des courses et des jeux for a ruling. Any litigation respecting the awarding of a prize may be submitted to the board only for the purpose of helping the parties reach a settlement.

Sweepstakes & Contests In The United States

• Elements of an Illegal Lottery• Prize• Chance• Consideration

• For a promotion to be legal, one of these elements must be eliminated.

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Skill Contests v. Chance Promotions

• What constitutes "skill"?• Outcome based on reasonable standard of skill of

targeted participants• Skill must determine and control the final result• Skill is the "dominant factor"• Some states say "any chance" causes game to be

"chance" based

• Judging Criteria• Criteria must bear reasonable relationship to contest and

must be disclosed

• Can require a purchase to enter a skill contest in most states

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Special State Rules

• Registration• Arizona: Intellectual skill contests that require a

purchase to enter• Florida and New York: Games of chance with prizes in

excess of $5,000• Rhode Island: Games of chance conducted by or

through retail outlets with prizes in excess of $500• Bonding

• Florida and New York: Games of chance with prizes in excess of $5,000

• Post of Rules and Regulations at Retail• Florida, Massachusetts, Michigan, New York, Rhode

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Language Restrictions on Advertising in Quebec

The Charter of French language requires that contractual documents and commercial advertising in Quebec be in French:

• 55.  Contracts pre-determined by one party, contracts containing printed standard clauses, and the related documents, must be drawn up in French. They may be drawn up in another language as well at the express wish of the parties.

• 58. Public signs and posters and commercial advertising must be in French.

They may also be both in French and in another language provided that French is markedly predominant.

However, the Government may determine, by regulation, the places, cases, conditions or circumstances where public signs and posters and commercial advertising must be in French only, where French need not be predominant or where such signs, posters and advertising may be in another language only.

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Language Restrictions on Advertising

Section 58: applies to all kinds of commercial advertising, whether in store, on outside signs or even on the web

• As a rule, commercial advertising has to be in French. • It can also be in another language, provided that French is “markedly

predominant”

Advertisements on the Same Sign Advertisements on Separate Signs of the Same Size

The space for French must be at least twice as big.

Signs in French have to be twice as numerous.

The font for French must be at least twice as big.

The font of French must be at least as big.

Note: There is now an Office de la langue Anglais

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Language Restrictions on Advertising

Any printed materials used in commerce, including any trade publications, advertising and product displays, must be in French.

• Another language may also be present provided that

this other language is not predominant. Section 52:

• “Catalogues, brochures, folders, commercial directories and any similar publications must be drawn up in French.”

• This Section has been applied to websites, which also have to be offered in French.

• The regulation allows catalogues, brochures, folders and web sites to be in two separate versions, one in French and one in another language.

Practice Note: If you have assets in Quebec, carry on business in Quebec, direct advertising in French or direct Quebec residents to a website it must be equally in French!

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Prohibition on Advertising to Children in Quebec

Section 248

“Subject to what is provided in the regulations, no person maymake use of commercial advertising directed at personsunder thirteen years of age.”

Section 249

“To determine whether or not an advertisement is directed atpersons under thirteen years of age, account must be takenof the context of its presentation, and in particular of

(a) the nature and intended purpose of the goods

advertised;

(b) the manner of presenting such advertisement;

(c) the time and place it is shown.”

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Prohibition on Advertising to Children

Sections 87-90 of the Regulation respecting the application of the Consumer Protection Act:

• Provide exemptions to the prohibition of advertising directed towards children

• Section 88 exempts, subject to certain conditions, ads placed in a magazine or insert directed at children that are for sale or placed in a publication that is for sale;

• Section 89 exempts, subject to certain conditions, ads whose purpose is to announce a program or show directed at children;

• Section 90 exempts, subject to certain conditions, ads constituted by a store window, a display, a container, a wrapping or a label.

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Advertising to Children

COPPA (15 U.S.C. § 6501 et seq. and 16 C.F.R. § 312)

• Special rules for promotions targeted to children under 13 years of age

Children’s Advertising Review Unit (CARU)• Reviews national advertising primarily directed to children under 12 years of age• whether the content is intended for children under 12• whether the advertisement appears during, or just before or after, a television program aired during children’s programming• whether the advertiser intended to direct the advertisement primarily to children under 12

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Other Prohibitions in Quebec

Emphasis on a Premium

Section 232“No merchant, manufacturer or advertiser may, by any means whatever, put greater emphasis, in an advertisement, on a premium than on the goods or services offered.

“Premium” means any goods, services, rebate or other benefit offered or given at the time of the sale of goods or the performance of a service, which may be granted or obtained immediately or in a deferred manner, from the merchant, manufacturer or advertiser, either gratuitously or on conditions explicitly or implicitly presented as advantageous.”

Practice Note: A contest/sweepstakes ad must be less than half devoted to the contest/sweepstakes and the prizes.

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Comparative Advertising

Industry Self-Regulation:• Advertising Standards Canada (ASC) offers a trade

dispute procedure, similar but not identical to the US NAD process.• It is a relatively cheap and expeditious alternative to litigation• No guarantee of a ruling within 60 days (NAD) but usually complete

within roughly 6 to 8 weeks.• Mandatory initial resolution meeting between parties, then hearing

before a 5 member industry panel.• Unlike NAD, the entire process (including the fact that a complaint was

filed, the positions of the parties, and the decision) are confidential.

Exception: ASC reserves the right to “go public” if the defendant advertiser does not comply with the ASC decision.

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Canadian Privacy Law

The Personal Information Protection and Electronic Documents Act (“PIPEDA”) Regulates the collection, use, and disclosure of personal information in the private sector.

PIPEDA: 1. States that personal information may only be collected, used or

disclosed with the knowledge and consent of the individual; 2. Limits the collection of personal information to what is necessary for

the purpose(s) stated; 3. Requires that personal information be collected by fair and lawful

means; and 4. Requires opt-in consent in certain situations, but generally allows

opt-out consent where above requirements met and not sensitive information.

Online behavioral advertising is the same between Canada and the US

U.S. Privacy Law

• No Federal Law but FTC's Five “Fair Information Practice Principles.” These five principles outline the rights of Notice, Choice, Access, Security, and Enforcement.

• Behavioral Advertising• California requires privacy policies for

websites and mobile applications which collect personal information and requires certain disclosures. Requires additional disclosures for websites which share personal information.

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Misleading Comparative Advertising

Competition Bureau Enforcement:• The misleading advertising prohibition is enforced

via either a civil or criminal “track”.

Civil Penalties:• Individuals – first offence: $750K; subsequent offence: $1 Million• Corporations – first offence: $10 Million; subsequent offence: $15 Million

Criminal: • Maximum term of imprisonment 14 years.

Other Remedies:• In addition to cease and desist orders and corrective advertising, the

Bureau may now seek a restitution order, and/or an injunction to freeze assets.

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Recent Major False Advertising Award

Bell Consent Agreement

• Bell entered a consent agreement with the Competition Bureau for $10 million dollars over misleading advertisements

• Many of Bell's services (wireless, home phone, internet, satellite TV) were not available at the prices advertised because of additional, mandatory fees

• Small, “hidden” disclaimers did not save advertisements since they contradicted the main message according the Competition Bureau

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Recent Major False Advertising Award

Richard v Time• Headline statements made in direct mailing

indicated Richard had won $833,337• Small print qualified it by saying that these

headlines are what they would announce if he entered and happened to be the winner

• Supreme Court of Canada found these misleading • $16,000 in damages

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Recent Major False Advertising Award

NIVEA My Silhouette

• NIVEA entered a consent agreement with the Competition Bureau for $80,000 and a retraction of claims

• Advertising had suggested that regular use of the product slims and reshapes the body, causing a reduction of up to three centimeters on targeted areas

What’s the Worst Thing That Can Happen

• Pull/Modify Expensive Advertising• But …

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Pulling the Ad Is Not the Worst Thing…

• Could Also be Assessed• Monetary Penalties

• Fine• Damages• Profits

• FTC Consent Order/State Attorney General Settlement• Corrective Advertising• Criminal Penalties

• Waste of Time and Money

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Recent Major False Advertising Award

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• Reebok pays $25 million in Customer Refunds following FTC settlement.

• Allegedly false claims made in connection with EasyTone & RunTone “toning shoes.”

Recent Major False Advertising Award

• Dannon settled class action for $45 million.• Allegedly false health claims regarding Activa

and DanActive.

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montréal · ottawa · toronto · hamilton · waterloo region · calgary · vancouver · moscow · london

Thank YouBrenda Pritchard, PartnerTel: 416-862-5716 Email: brenda.pritchard@gowlings.com

Jason Gordon, AssociateTel: 312-558-6145Email: jwgordon@winston.com