1. Internet Jurisdiction: Where Are We Now? John D. Gregory Toronto Computer Lawyers Group November 24, 2005

2. TCLG November 24, 20052 Internet Jurisdiction Cyberspace is not a no-law land Finding jurisdiction What the tribunals do Managing jurisdiction What private parties do Indirect jurisdiction Reintermediation Legislated jurisdiction Now what?

3. TCLG November 24, 20053 Finding Jurisdiction Finding jurisdiction Making the case When does a decision-making body take jurisdiction? Enforcing the result What difference does it make if a decision cannot be enforced? Civil, regulatory and criminal actions Choice of forum vs choice of law Here: mainly forum, law assumed to go with it e.g. normal contract clauses here illegal elsewhere

4. TCLG November 24, 20054 Finding Jurisdiction Making the case: civil Background: Jurisdiction arising out of service ex juris Morguard shift: real and substantial connection – the Canadian standard Hunt: Morguard is constitutional rule Beals: Morguard is international rule

5. TCLG November 24, 20055 Finding Jurisdiction Muscutt v. Courcelles (2002), 60 O.R. (3d) 20 Factors for a Real and Substantial Connection no factor is determinative Connection between forum and Ps claim Connection between forum and D Unfairness to D in assuming jurisdiction Unfairness to P in refusing jurisdiction Involvement of other parties to suit Courts willingness to enforce extraprov jgt on same ground Interprovincial or international case Comity and standards of jurisdiction, recognition and enforcement prevailing elsewhere

6. TCLG November 24, 20056 Finding Jurisdiction Internet jurisdiction – history Availment test – Compuserve (US) Active/passive test – Zippo (US), Braintech (Canada) Targeting test – effects test (how subjective?) Real and substantial connection test Different law: different applications?

7. TCLG November 24, 20057 Finding Jurisdiction Defamation – the most visible test Ontario: Bangoura (C.A.) Law: Muscutt factors evaluated one by one Policy: do not expose publishers to worldwide liability Fact: Connection was a problem Plaintiff came to Ontario after publication

8. TCLG November 24, 20058 Finding Jurisdiction Defamation: BC: Burke (BCSC) Law: based on Bangoura motion judge Law: balance factors of convenience Witnesses, travel Policy: protect reputation where it is affected Fact: P had real connection to B.C. D should have known wide reach on Net

9. TCLG November 24, 20059 Finding Jurisdiction Defamation: Australia: Gutnick (HC) Law: no new principles expressed Policy: protect reputation where P was. Policy: did not expose publisher to worldwide liability, just where damage done Fact: Guttnick had reputation in Victoria Barrons had 1700 Australian subscribers

10. TCLG November 24, 200510 Finding Jurisdiction Defamation: UK: Lewis v King (CA 2004) Law: no new principles agreed that P was defamed in the UK and had a reputation there Limit claim to harm done in forum Not only one action therefore one forum May be multiple actions in many jurisdictions Not a free-for-all for claimants libelled on Net

11. TCLG November 24, 200511 Finding Jurisdiction Lewis v King (2) Targeting theory disapproved in truth [the publisher] has targeted every jurisdiction where his text may be downloaded. Targeting is too subjective, leads to uncertainty Connecting factors are not legal rules juridical advantage vs substantial justice

12. TCLG November 24, 200512 Finding Jurisdiction Non-defamation actions targeting more attractive with voluntary connection on both sides Strategic litigation Take advantage of local laws by initiating suit (no different from offline world?) E.g. Cairo v CMS (Calif.) web scraper brought pre-emptive suit

13. TCLG November 24, 200513 Finding Jurisdiction Trade mark litigation Trade marks are national, web and web addresses are international Courts in forum of issuer of trade mark tend to take the cases (e.g. Google ads) Patent litigation Again national law vs international trade RIM v NTP: enforcement of national patent against foreign (alleged) use of the patent? Should US court do that? Should patent extend so far?

14. TCLG November 24, 200514 Finding Jurisdiction Civil jurisdiction: NOTE: jurisdiction simpliciter vs forum (non) conveniens Theory: decide jurisdiction first, appropriateness afterwards Practice: hard to keep them apart Lewis v King did pretty strict job but shows difficulty of doing so

15. TCLG November 24, 200515 Finding Jurisdiction Making the case: Regulatory law No single rule, no consistent practice Different kinds of connecting factors sought when state (regulator) is a party, when non-court is tribunal Creeping real and substantial connection? Different substance to reality?

16. TCLG November 24, 200516 Finding Jurisdiction Trendsetter case: Socan (Tariff 22) (SCC 2004) Copyright Appeal Board – rates for downloaded music held: R&S C between source of music & jdn Note: NOT location of server Why not? Users cant know; doesnt matter in practice But: privacy (Lebel) – intrusiveness of inquiry But: civil standard (divorce!) OK for regulation? Alternatives: Impact? Targeting? Cf. IcraveTV case in US – jdn taken over Cdn business, activity was not illegal in Canada

17. TCLG November 24, 200517 Finding Jurisdiction Regulatory jurisdiction taken: Human Rights Tribunal Citron v Zundel (CHRC 2002) Server in US, controlling mind (and telecom network) in Canada Securities commission (Alberta) World Stock Exchange (1999) No one else to do it Defendants personally in AB, server abroad

18. TCLG November 24, 200518 Finding Jurisdiction Regulatory jurisdiction taken (2) Language laws Office de la langue française Business in QC, targeting QC: easy Server location not relevant Guidelines on web site Success in several court cases Cf Loi Toubon in France

19. TCLG November 24, 200519 Finding Jurisdiction Regulatory jurisdiction declined Privacy Commissioner of Canada Abika.com (letter Nov 18/05) Parliament did not intend to legislate extraterritorially Cant collect evidence from U.S. party No real and important link between operations and Canada Pushing for multilateral and bilateral assistance Outsourcing to US data processors Cant keep Cdn companies from doing this Companies here must inform customers

20. TCLG November 24, 200520 Finding Jurisdiction Regulatory jurisdiction: open question Taxation permanent establishment question OECD work on location of server Factors one way or the other Software alone wont create jurisdiction General concern about learning of transactions Sales taxes harder than income taxes Study papers by Canada Revenue Agency: fear?

21. TCLG November 24, 200521 Finding Jurisdiction Making the case: criminal law Few extraterritorial criminal laws Traditional tools at investigative stage Extradition to stand trial in offended jurisdiction Impact on residents may draw jurisdiction to forum High point (US) Granite Gates – gaming Query: defence of local gaming vs Net? Offensive content cases Spam: Microsoft vs Canadian spammers Nazi material: Yahoo France – battling courts

22. TCLG November 24, 200522 Finding Jurisdiction Enforcing the result: civil cases What is the point of asserting jurisdiction if results will not be enforced against the wrongdoer? Basic rule in Canada: Morguard: full faith and credit – enforce from place that takes jurisdiction based on R&S Connection. Supreme Court ensures integrity of national system Burke court dismissed unenforceability argument So courts take a chance E.g. Barrick v Lopehandia: injunction in Ontario, hope in this post-Morguard era that B.C. would enforce it.

23. TCLG November 24, 200523 Finding Jurisdiction For foreign judgments: public policy defence U.S. example: first amendment vs enforcement of foreign defamation judgments (lots of cases) Discussed in Lewis v King: not determinative Muscutt factor: (golden rule) If we take jurisdiction over them and expect them to enforce our judgments, then we will have to enforce judgments that they give based on similar ground of jurisdiction.

24. TCLG November 24, 200524 Finding Jurisdiction Enforcing the result: regulatory cases Human rights: Zundel Hoped that order would encourage local ISPs to block site Hoped that some respect paid in US Securities Commission: WSE Defendants were in AB Hoped for impact of message re conduct

25. TCLG November 24, 200525 Finding Jurisdiction Enforcing the result: regulatory cases (2) Privacy Commissioner of Canada Cant compel appearance of main party Cant enforce the result Question of best use of limited resources, too? More of a question for regulators than for courts BUT: any intent inferable from statute? Educational function in Canada Impact is on Canadians i.e. felt here Connecting factors: collection, use, disclosure Wrong-doing is easy to prove without party Comparison of privacy laws would be useful Prescriptive jurisdiction vs enforcement power

26. TCLG November 24, 200526 Finding Jurisdiction Enforcing the result: criminal cases Little or no direct enforcement of foreign criminal penalties Trials in absentia are known – absence of accused/defendant is not fatal to process Combination of forces e.g. sweeps of Internet fraud by regulators in many countries so can lay charges where needed.

27. TCLG November 24, 200527 Managing Jurisdiction Private sector action on jurisdiction (and governmental for itself) ABA/ICC survey (2003/4): North American businesses much more concerned with jurisdiction than European or Asian business N.A. businesses expected things to get worse Managing jurisdiction mainly means avoiding jurisdiction, but may mean submitting to one to avoid others.

28. TCLG November 24, 200528 Managing Jurisdiction Managing by law Anti-suit injunctions (more or less effective) Our courts tell your courts to stay out Restrict by contract the use of site to those in acceptable places Terms of use to do so: enforceable? First Canadian click-through case is on point: Rudder v Microsoft Browsewrap terms: harder to enforce vs good faith party Local laws with mandatory jurisdiction EU, Quebec, ULCC draft terms on consumer jurisdiction Works only where some agreement can be alleged, i.e. not for all kinds of law

29. TCLG November 24, 200529 Managing Jurisdiction Managing by technology Geolocation – early days but: NSA patent Sept 2005 – uses and limits Reading of country codes UNCITRAL: no presumptions from cc:tlds Blocking technology Chinese lead? Adaptable to commercial uses? Preferred servers E.g. google, amazon – follow the codes Local proxies for efficiency and law too? Digital rights management/tech protection measures

30. TCLG November 24, 200530 Managing Jurisdiction Managing by practice Registration requirements for access to web site (accept from good places) Credit cards as proxies for location ID Targeting desired markets: Server location (efficiency, name) Language (exposes to regulation) Domain names, country codes Content appropriate for local interests

31. TCLG November 24, 200531 Managing Jurisdiction Managing by practice (2) Virtual communities Rules and special services for members only Offer online dispute resolution Delocalizes DR principles Avoids downsides of foreign jurisdictions rules May be more efficient too International arbitral awards widely enforceable (subject to writing requirements) But: no universal method for complex disputes

32. TCLG November 24, 200532 Indirect jurisdiction Who is accessible if the primary target is not? by indirection find direction out the reintermediation of the Internet Not necessarily comfortable for the targeted intermediaries Sometimes intermediaries are direct targets, sometimes used for evidence, sometimes for pressure on the real targets

33. TCLG November 24, 200533 Indirect jurisdiction Communications intermediaries Internet Service Providers Attempt to hold liable for copyright infringement seems to have failed Notice-and-takedown vs notice-and-notice Used in search for evidence (subject to privacy) Pressure to use quasi-public filters to block child pornography sites Tension between use and statutory protection of ISPs Internet portals Yahoo France – Nazi materials Yahoo has taken Nazi materials off its service

34. TCLG November 24, 200534 Indirect jurisdiction Internet portals (2) Yahoo.com has agreed to close chat rooms to those under 18 (Oct 2005) deal with Elliot Spitzer Other portals have closed chat rooms altogether to avoid child luring Telecoms Modernization of Investigative Techniques Act (Bill C-74) makes CSPs use techniques that allow interception of data if so ordered, to keep info, to make it available US – CALEA – frequent pressure to do likewise Cybercrime Convention – source of such ideas

35. TCLG November 24, 200535 Indirect jurisdiction Financial intermediaries Credit card companies Consumer protection: mandatory chargebacks Gaming debts and winnings targeted by law enforcement Private actions for contributing to gaming addiction have failed (so far) PayPal Criminal charges under Patriot Act for facilitating gambling payments (settled by large payment)

36. TCLG November 24, 200536 Indirect jurisdiction Financial intermediaries (2) Auction houses (e.g. eBay) Pressure to decline Nazi memorabilia, other offensive items Babies, etc Big merchants Use to collect personal information How much legal pressure needed to extract PI

37. TCLG November 24, 200537 Indirect jurisdiction Libraries (in US so far) Source of information about what people read USA Patriot Act requires secret collaboration with FBI Child protection statute requires libraries to filter material not appropriate for minors, on threat of losing federal funding (rule upheld in appeal court) Not all libraries are complying, but its expensive to refuse

38. TCLG November 24, 200538 Indirect jurisdiction Transportation companies Records used by states to see who has been buying out-of-state liquor and tobacco over the Internet for tax purposes usually

39. TCLG November 24, 200539 Legislated jurisdiction Not unique to Cyberspace Not widely successful Probably least important aspect of jurisdiction these days But watch particular examples General or special application

40. TCLG November 24, 200540 Legislated jurisdiction General application Hague Convention on Choice of Court Final result of long more ambitious project Attempt to exclude click-through contracts Will enforce choice of forum clauses Far from in force yet NOTE: MANY more conventions (bilateral or multilateral) on recognition and enforcement of judgments that apply to cases on Cyberspace

41. TCLG November 24, 200541 Legislated jurisdiction Cybercrime Convention and protocol on hate literature (signed by Canada in 2005) Promotes collection and sharing of information (duties on ISPs) Uniform Court Jurisdiction and Proceedings Transfer Act (UCJPTA) Aims to codify Morguard R&S C principle

42. TCLG November 24, 200542 Legislated jurisdiction UCJPTA – some presumptions of jurisdiction Rights in real property in forum Contract to be performed in forum Contract expressly chooses forum Contract solicited in forum Tort committed in forum Business carried on in forum Injunction about doing something in forum Enacted in several provinces (not ON yet)

43. TCLG November 24, 200543 Legislated jurisdiction Special application Consumer protection Quebec, France: cannot prevent consumer from suing in jurisdiction of residence Treaty of Rome (EU): ditto (and law) Telecommunications Act (Canada) Amended after Zundel case to ensure that computer network was included in federal jurisdiction over telecom networks

44. TCLG November 24, 200544 Legislated jurisdiction Blocking statutes The other side of the jurisdiction coin Purport to prevent suit within jurisdiction including cooperation with foreign courts even where would normally do so Not valid within Canada: Hunt (SCC) Precedents for ignoring their effect on enforcement when taking jurisdiction (examples in Burke)

45. TCLG November 24, 200545 Legislated jurisdiction Legislated harmony of law A way that governments consciously attempt to avoid problems of diversity of jurisdiction is to harmonize the law applicable across jurisdictions, so that it will not matter whose law applies or what forum will apply it. UNCITRAL Model Laws on Electronic Commerce Template on Internet Sales Harmonization UCJPTA, UECA, UEEA, UETA Many EU Directives on e-this-and-that

46. TCLG November 24, 200546 Conclusion (interim) Complexity of Who wants to connect (assert legal jurisdiction) Connecting factors Reasons to connect Ways to manage – to avoid, to impose Do not claim to mention all methods or all cases Some foreign examples may be borrowed here in the future Techniques, technology and reasoning are all evolving, maybe even legislation Fact + Policy = jurisdiction Solving Legal Problems in Electronic Government: Jurisdiction, Regulation, Governance, (2002), 1 Can Jl of Law and Tech. No 3 p.1 http://cjlt.dal.ca/vol1_no3/pdfarticles/gregory.pdf