Simon Chester is a member of the KNOWlaw Group of the Toronto law firm of McMillan Binch. This article was prepared with the assistance of Ted Kelterborn, Bruce McWilliam, David Kent, Kathy Johns and Brian Hilbers.

As the new year starts, the Binchmarks team looks back on the momentous and curious legal stories of 1998. We’ve left aside the triumphs of Michael McMillan and Robert Lantos and the current battles of Garth Drabinsky – those we’re all too familiar with. 1998 was a year when the Canadian industry faced both success and challenge on the legal front.

CRTC Web hearings

The rapid proliferation of ‘new media’ products and services has ignited a number of challenging debates worldwide. It has raised numerous thorny questions for Canadian regulators and law-makers. Chief among them is whether cyberspace falls under federal jurisdiction.

The crtc jumped into the Constitutional swamp by embarking upon an ambitious two-week public consultation exercise into the world of new media in November of 1998. The focus was on the extent to which any of the new media are broadcasting or telecommunications and therefore, would fall within the federal regulatory domain.

Three issues dominated: How is ‘new media’ to be defined? Should the crtc regulate the provision of new media services? If so, is it practically possible?

Although the answers may be somewhat elusive, the process is unquestionably an invaluable one, allowing Canadians to get the issues on the table and open for discussion.

Feature film policy review

Heritage Minister Sheila Copps announced a review of Canada’s feature film policy. The primary aim of the review process is to identify measures and innovative strategies in order to sustain and develop a strong indigenous feature film industry well into the next century.

At the same time, she released a provocative policy discussion paper which outlines the history of federal feature film initiatives and looks at the current state of the industry. It also raises a number of challenges and questions for consideration which focus largely upon the apparent flaws in the financing, distribution, marketing and exhibition infrastructure of the Canadian film industry.

Although many of the ideas floated in Copps’ discussion paper may simply require government funding, several would likely require either revisions to existing legislation or the drafting of new legislation. Breathing new life into the Canadian film industry may take more lung capacity than originally imagined.

Moratorium on cable acquisition of specialties

In late July, the crtc flexed its considerable regulatory muscles and denied an application by Sportscope Television Network, licensee of the ‘Headline Sports’ specialty channel, to transfer a 47.85% ownership interest to Canadian cable giant Shaw Communications.

It was like ‘deja-vu all over again’ three months later in October when the commission denied an application by Rogers Broadcasting to acquire a 20% interest in CTV Sports Net, licensee of the ‘Sports Net’ specialty channel.

It’s not that the crtc has it out for cable sports services. Rather, in the commission’s view, ‘there remains insufficient channel capacity on cable networks and insufficient competition among distributors to overcome concerns related to the potential for undue preference in the cable carriage of affiliated specialty or other such broadband services. Until these circumstances change, cable licensees and their affiliates should generally be prohibited from acquiring or increasing their interests, held either directly or indirectly, in programming undertakings other than those that provide over the air radio or television services.’

CTV Sports Net has reportedly applied to the Federal Court of Appeal for the right to appeal the ruling on the grounds that the commission exceeded its jurisdiction and erred in basing its decision on irrelevant considerations such as available channel capacity, and that it failed to give adequate consideration to existing safeguards in the applicable legislation which allow it to remedy a situation where it finds that undue preference or disadvantage has occurred.

SCC rules on privacy rights for people in public

The Supreme Court of Canada upheld a decision of the Quebec Court of Appeal that photographer Gilles Duclos violated the privacy rights of Montreal teenager Pascale Aubry when he took her picture as she sat on a doorstep in Montreal and later published it in a magazine without her consent.

The court recognized that the right to one’s image is an element of the right to privacy contained in the Quebec Charter of Rights and Freedoms.

Of equal importance was the court’s observation that a person’s right to privacy is not absolute. In a nutshell, the court indicated that a photographer does not need to obtain consent from a subject who is accidentally or incidentally photographed in crowds or from a subject who is brought into the public arena by virtue of his or her position, professional duties or due to some other unique circumstance.

In the end, Duclos and the magazine which published his photos were required to pay Aubry the princely sum of $2,000, a sum which may just cover the photocopying costs of this case. Oh well, it’s the principle of the thing.

And Ottawa’s not

far behind

While the photographers may wonder which planet the Supreme Court comes from, an even more significant Ottawa development came out at the start of October, when John Manley announced Bill C-54 – a new Privacy Act.

This Act will apply to businesses regulated federally and eventually to every Canadian business. The bill also represents another plank in Ottawa’s grab to stake claim to control cyberspace. Expect sparks from a Quebec government which is also extending language laws onto the Internet.

Show and tell

Pictures can be just as damaging – and defamatory – as words.

When Colour Your World sued the cbc over a program called Mercury in Paint, it admitted that what the program said was true. But, it argued, the use of certain footage was defamatory.

The Ontario Court of Appeal overturned the trial judge’s decision that the program was defamatory. However, it agreed that audiovisual aspects of a program – such as voice intonation, visual background, sequence of images, facial expressions and gestures – can change the impression that verbal statements might otherwise give and lead to defamation.

The court suggested it will look at the accuracy of the statements and the overall impression of the show to decide whether the other elements of the show distort the meaning of the words in a defamatory way.

Television music

performing rights

A January 1998 Copyright Board decision made important changes to socan’s television music performing rights royalties. First, the royalty rate paid by television broadcasters has been reduced. Second, a new royalty alternative to socan’s traditional standard licence has been introduced.

The board reduced the standard royalty rate from 2.1% to 1.8% of advertising revenues. In addition, television broadcasters can now opt for an alternative royalty calculation which effectively reduces their socan payments pro rata to the degree they use music which is outside socan’s repertoire. Previously, using a single second of socan’s repertoire triggered an obligation to pay the entire standard rate.

For the first time, the royalty structure provides an economic incentive to both composers and producers to make direct licensing arrangements. Unknown factors are whether composers will engage in these negotiations and whether socan will let them. socan’s application to review the decision will be heard in court in February 1999.

Telecom mergers

The past year saw the entire North American telecommunications industry shaken up by mergers big and bigger. Not surprisingly Canadian telecommunications giants have faced huge shake-ups.

Notably TELUS Corporation, after abandoning a possible merger with AT&T Canada Long Distance Services, announced its intention to join forces with bc tel, and Call-Net Enterprises, parent of Sprint Canada, completed its takeover of Fonorola.

Other deals announced in 1998 included the merger of Teleglobe and u.s.-based Excel Communications, and the acquisition by MetroNet Communications of Rogers Telecom.

These transactions have substantially altered the competitive landscape for telecom services in Canada, creating more powerful telecommunication players which are better-positioned to compete with domestic and foreign rivals.

Y2K settlement

The sky is falling. The sky is falling. Scaremongering about the year 2000 software bug has started in earnest. Stock up on batteries, water and winter underwear we’re advised.

For those who think it’s all hype, a few stories suggest that people are paying real money to avoid this problem.

For example, in 1997, Atlaz International, an American computer reseller, launched a Y2K class action lawsuit against its software supplier, claiming that the accounting software in question was not Y2K compliant, and that the supplier was improperly charging for Y2K upgrades, rather than providing them at no charge.

In October, Atlaz and its supplier reached an out-of-court settlement whereby the supplier agreed to provide Y2K-compliant software at no extra cost as well as pay up to approximately us$500,000 in attorneys fees and costs.

For more details of the Y2K industry, watch this space in December 1999.

(This article contains general comments only. It is not intended to be exhaustive and should not be considered as advice in any particular situation.)