Supreme Court Securities Act Constitutionality Ruling Throws Digital Laws into Doubt

The Supreme Court of Canada this morning ruled that the federal government’s plan to create a single securities regulator is unconstitutional since it stretches the federal trade and commerce clause too far into provincial jurisdiction. The ruling is a wake-up call on the limits of federal powers, even where many may agree that the policy rationale for federal intervention is a good one. The court ruled that most of the securities regulatory activities deal with day-to-day contractual regulation within the provinces and that “these matters remain essentially provincial concerns falling within property and civil rights in the provinces and are not related to trade as a whole.”

While the immediate implications are obviously focused on the securities industry, there are significant implications for several of Canada’s digital-focused laws including PIPEDA (the private sector privacy law), the new anti-spam legislation, and the digital lock rules found in Bill C-11.  The privacy and anti-spam laws are particularly vulnerable since both rely on the same trade and commerce provision that the court just addressed. There have been questions about the constitutionality of PIPEDA since its inception (Quebec launched a challenge that is now dormant, State Farm recently revived the issue) and today’s decision will certainly stoke the fires for a constitutional challenge, particularly given the Privacy Commissioner’s call for stronger enforcement powers. The anti-spam legislation, which awaits final regulations before taking effect, faces similar questions since it too relies heavily on the trade and commerce clause.

The constitutional questions of Bill C-11 do not arise from the trade and commerce clause, but do involve similar questions about encroachment into provincial jurisdiction over property and civil rights. As I wrote earlier this fall, the government’s own analysis of the bill confirms that the digital lock rules envision potential violations of copyright even when there is no copyright infringement. By removing the link to actual copyright infringement (breach of the digital lock rules may occur without a copyright infringement and without regard for traditional copyright defences), the law ventures into property and civil rights. Several scholars have argued that the approach is fundamentally about contractual rights, not copyright, and thus falls within provincial jurisdiction. Today’s Supreme Court of Canada decision serves as a reminder that there are limits on federal powers and that the C-11 digital lock approach may be more constitutionally vulnerable than its supporters are willing to admit.


  1. Let’s no pretend our federal government is capable of rational thought.

  2. Andrew Butash says:

    That’s the beauty of this. It doesn’t matter if the federal government is capable of rational thought. The Supreme Court of Canada is, and they can bitch-slap the government back into place. At this point, our only hope to kill the digital lock rules of C11 is a constitutional challenge on exactly this ground.

  3. John Lawford says:

    Counsel, Public Interest Advocacy Centre
    I’d have to say temper your glee – this decision is a disaster for federal level consumer protection initiatives – as you point out, anti-spam and PIPEDA – but also paints us into a corner on many areas of financial consumer protection. Congrats, now we have to fight always 10 battles not 1.

  4. @John Lawford
    I have no doubt that we’ll eventually get there, but if we can leverage off this to reign in C-11 a bit, then I’m all for delaying it…or even killing it all together.

    Personally I’d rather not give our federal government, ESPECIALLY the Harper government, this kind of power since they’ve shown over and over again their sheer contempt for the average consumer. With this kind of power they would surely abuse it to the advantage of big business. If a national regulator works so much better, why is it that Canada is in one of the most stable economic positions of all the developed countries? I’m simply not convinced if its need or effectiveness.

  5. Provincial Enforcement
    Perhaps I don’t fully understand the implications of this ruling, but isn’t the gist of this : federal enforcement cannot be employed, but provincial enforcement is allowed? If so, I would expect Big Media to simply hammer down on less-influential, provincial politicians and button down the provinces one by one.

  6. @John Lawford
    I live (politically) in a province first of all, and in a country next, so I’m glad to see federal limits like these upheld. I’m all for creating efficiencies, but not if doing so undermines basic liberties and rights like property and privacy (fascism is certainly “efficient” but it’s about as muddy as the modern meaning of “secure”). I think there are opportunities to coordinate between the provinces that better respect the provincial distinction.

    For the most part the provinces are free to coordinate their services. (Provincial health care programs for example, created under the federal Health Care Act, are operated separately but could certainly coordinate services.) I don’t have any problem with country-wide collaboration, but I don’t endorse federal laws or initiatives that try to coerce the provinces and threaten the liberty of their individual inhabitants.

    Individuality is an operative word in all this and effective property and privacy laws are necessary to protect individuals’ rights (which is why DRM is doubleplusungood).

    It’s always inconvenient to share responsibility but the solution is simply to encourage cooperation. Make it easy, yes, but it should not simply become a federal project (no matter how much bickering… that’s just democracy). If I see you re-inventing the wheel, I can offer to show you my way, but it would be wrong to force you to do it my way.

  7. David Gilbert says:

    A Cynic Might Think…
    A Cynic Might think that given that the copyright bill is tied to the negotiations surrounding the tar sands and it’s pipeline and given that Harper is a consummate manipulator, is C11 simply a troll for the US’s benifit? Does the government thus _expect_ the law to be overturned (hopefully after the tar sands pipeline is being built)?

  8. Don’t throw out your tin hat just yet …
    David, I have put forward that scenario for some time. Even the conservatives with their majority should at least be hearing the near universal outcry against invoking copyright infringement where none actually occurs (as per their own internal evaluation).

    By passing the law as the US government and media conglomerates are demanding they are meeting the ‘letter of the law’ while knowing that such laws will likely be overturned in the inevitable supreme court challenge.

    Not exactly a win-win scenario for them but the best they could probably hope for.

  9. Constitutional Challenge
    The Conservatives will no doubt find an excuse to suspend the Constitution since it keeps getting in their way. Then the camps will be built……

  10. color of right
    cell monitoring, e-book burning, copyright..

    the gov’t does NOT have the color of right to enforce their wishes.

    the biggest landgrab in history just took a nose punch.

    pat donovan

  11. Legislation VS Suppliers
    You know, when I read announcements such as this:

    it occurs to me that, no matter what legislation we pass, the hardware suppliers have already mapped the direction they’re going. Yes, it is just another hurdle in the chain, like region coding / content scrambling / ARccOS / Macrovision / DCPS / HDCP-HDMI etc, but clearly, there is already an established protocol for digital locks and the manner in which they are going to be enforced.

  12. Bad Link
    Sorry, link didn’t come through as expected. Here’s the splash page, see “Press Releases”

  13. New DRM Scheme
    @oldguy : Thanks, will try and remember that. Don’t often link to the world wild west, here.
    Now that I’ve had a few hours to digest the content of that “news” release, it has occurred to me that what they are talking about is not just protecting hidef content on flash devices, but rather, introducing an all-new “high definition content protection scheme”, one that is capable of protecting (among other things) high definition video.
    This isn’t a new agreement on controlling blu ray content, this is a general protection scheme being embedded on all flash storage. It is simply worded to imply that it is for controlling high definition video. Use a device with flash memory, use DRM.
    Yeah, I can see how digital locks will be totally benign.

  14. “Today’s Supreme Court of Canada decision serves as a reminder that there are limits on federal powers and that the C-11 digital lock approach may be more constitutionally vulnerable than its supporters are willing to admit.”

    Please don’t toy with my emotions on this matter. I had long since abandoned any hope that Canada could avoid seeing digital lock provisions like what C-11 is advocating. Could it possibly be true? Is there still a reason to have hope?

  15. @Mark “Please don’t toy with my emotions on this matter”
    Don’t despair, It is the season of Miracles 😀

    And in that spirit Merry Christmas … everyone!

  16. bag sealing tape
    I have no doubt that we’ll eventually get there, bag sealing tapebut if we can leverage off this to reign in C-11 a bit, then I’m all for delaying it…or even killing it all together

  17. I’m not in favor of killing it, personally. I’m strongly in favor of ammending it.

    If, as Mr. Geist himself has recommended previously, the digital lock provisions were pulled back slightly so that they still abide by the provisions of the treaties that Canada has an obligation to while at the same time not criminalizing behavior that they have already outright stated they have no intention to enforce (the infeasability of direct enforcement against private lockbreaking is wholly immaterial in this matter), and as long as the tools that a person might use to accomplish the endeavor are not, themselves, outlawed, I would have absolutely no problems with C11. Indeed, C11 contains many explicit fair dealing provisions that I believe are long overdue for Canada’s copyright policy.

  18. Devil's Advocate says:

    “…C11 contains many explicit fair dealing provisions…”

    If you ask me, the only reason any Fair Dealing clauses appear in C-11 is because the Digital Lock provisions were fully intended to negate them.

    That way, they try to make it look like they’re addressing Fair Dealing, while still cowtowing to their corporate masters.

    Why else would compromising on the Digital Lock provisions be so difficult? Why else would it seem every bit of feedback they’re getting from the Public is being ignored?

    They never intended anything that would actively deny any of the IP-maximalist wishes of Big Business. Particularly while Harper’s still got his tongue deep inside the corporate collective butt.

  19. Devil: Heilein’s razor – “never attribute to malice what can be readily be attributed to stupidity (but don’t rule out malice)”. While what you may be proposing is possible, the conservative’s reaction is still far too easily explained by simple ignorance.

    The chief problem appears to be, here, that the conservatives are not only ignorant, but they are ignorant of their ignorance to such a degree that they believe they actually understand the ramifications of their choices… which they do not, because C-11 won’t actually make any difference, and there’s going to be continuing pressure from certain sources to do even more about the ongoing piracy problems that go unabated by the passing of such laws.

  20. Devil's Advocate says:

    Heilein’s (aka “Hanlon’s…”) Razor
    I wish I could share your faith in such “widespread stupidity” as the culprit.

    But I think I’ve been educated over the years by the all the other seemingly “clueless” agendae exhibited by so many in power, that were later exposed for what they were.

    The only stupidity I can pin on Harper is his faith that people will continue to write off his agenda as being just as clueless, and not really pay full attention to where it comes from.

    “Fool me once, shame on you…”
    (You know the rest, I’m sure.)

  21. It might seem like a bit of a stretch that anybody could be this dense as to not see the problems with C11, it really seems to me like their agenda is genuinely about trying to achieve a “balanced” bill, one that protects both content providers and consumer freedoms. They’ve stated this publicly many times. Now while I’m not so naive as to think that everything they say publicly is going to always be true, if it were actually just based on satisfying big media, then C11 would likely not even have the provisions it does for fair dealing at all (which are not, by the way, negated in any way by the digital lock provisions of the bill alone, what really negates them are the provisions of the bill only in the face of current trends in technology as well as what motivates commercial content providers).

  22. “Daily Digital Lock Dissenter”
    To those that want to keep the appearance that they believe the Harper government is simply ignorant of the effect of the Digital Lock provisions, perhaps they want to have a look back at all of Dr. Geist’s Daily Digital Lock Dissenter postings, which are mainly feedback provided on the identical Bill C-32. They know exactly what they are doing. Yes, they choose to ignore the feedback.

  23. No… if they realized what they were doing, they would be seeking a compromise (there is an old proverb that says something to the effect of a fool will think only himself as right, but a wise person heeds other peoples advice). They could reach a compromise that would satisfy all of the requirements of WIPO, and still give consumers the crucial freedoms that most opposers have tried to address. Such a policy is entirely possible, but the conservatives will have none of it, and there is no advantage to doing so. The digital lock provisions of C-11 will do absolutely nothing other than turn millions of Canadians in closet lawbreakers that the government has openly admitted they have absolutely no intention to hold anybody accountable for (although people will have to actively seek out illegal sources on their own to get the tools to do so, and this will make it more inconvenient for otherwise law abiding citizens). This is not a policy of a government that has even the slightest clue what they are actually talking about.

    While there are admittedly organizations that are trying to push the government into passing bills like C-11, they would not be gaining anything by the digital lock provisions in C-11 that actually exceed WIPO standards without far more restrictive laws being in place as well, many of which do not have anything directly to do with copyright at all, such as, to give just one example, outlawing any general purpose computer being connected to a public network other than those that are entirely for commercial purposes. *THAT* proposal would smack of an agenda quite different from the ignorance that appears to be behind C-11.

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