Guide to Doing Business in Canada: Advertising & marketing – Lexology

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Advertising & marketing
With a well-educated population, a vibrant media industry, and relatively clear regulations related to advertising and promotions, Canadians produce some of the best advertising creative in the world.
However, foreign advertisers should be aware of the unique aspects of Canadian law and culture that govern advertising in Canada. For example, in the province of Québec, language laws mandate equal prominence of French on all packaging, product warnings and instructions, and greater prominence of French at point-of-sale and, in many circumstances, in advertising and promotions. This requirement reduces the amount of space available to advertisers, especially in the case of packaging for national products. Most recent amendments to Québec’s language laws concern the requirement to ensure a sufficient presence of the French language when using non-French trademarks on storefront signage.
1. Packaging and labelling
All prepackaged products sold in Canada are governed by a series of federal packaging and labelling regulations. In order to protect consumers from false claims and harmful or potentially harmful products, certain items — including food and beverage, natural health, tobacco, cosmetic products and consumer chemical products, among others — are subject to more stringent labelling requirements.
Federal packaging laws also stipulate that basic information on all products be provided in both French and English — although, outside of Québec, prominence of any particular language is not mandated. Certain foreign-made products sold in Canada also require country-of-origin identification under the Marking of Imported Goods Order.
2. “Product of Canada” and “made in Canada” claims
The Competition Bureau has published a number of enforcement guidelines to help industry professionals and advertisers comply with legislation prohibiting false and misleading advertising — such as the federal Competition Act. One such set of guidelines addresses “product of Canada” and “made in Canada” claims. Under these guidelines, for a product to be represented as a “product of Canada,” its last substantial transformation must have occurred in Canada and at least 98 per cent of the total direct costs of production must have been incurred in the country.
For a “made in Canada” claim, in addition to Canada being the location of the product’s last substantial transformation, at least 51 per cent of the total production costs must have been incurred there. A “made in Canada” claim must also be accompanied by a qualifying statement disclosing the presence of foreign content — e.g., “made in Canada with imported parts,” or “made in Canada with domestic and imported parts.”
3. IP and copyright
Under the federal Copyright Act, songs, logos and, in some cases, even slogans used in Canadian advertisements are protected by copyright. The Copyright Act was amended in 2012 to allow fair dealing with such works for the purpose of parody or satire, but the extent to which these defences will apply in a commercial or comparative advertising context remains uncertain. In addition, Canada has a “notice and notice” regime for internet copyright infringement. The regime provides a mechanism for copyright owners to give notice of internet-related copyright infringement claims to internet intermediaries, who are required to respond to a notice in a specified manner or face liability. When an ISP or host receives a notice from a copyright owner that contains the requisite information, they must forward the notice "as soon as feasible" to the user who is associated with the alleged infringement. The ISP or host is required to store the subscriber's internet protocol information for six months or a year if a court action stems from the alleged infringement.
The use of competitors’ registered marks and logos in comparative advertising may give rise to additional concerns under Canadian trademark law. For example, while in the United States, use of a competitor’s trademark in truthful and non-deceptive comparative advertising is generally legal, in Canada, use of competitors’ registeredmarks or logos — even in a fair and accurate comparative advertising context — may, in certain circumstances, be actionable as an unlawful depreciation of the goodwill associated with the registered mark or logo.
The Canadian Intellectual Property Office maintains a database of registered and pending trademarks, and does not allow registration of confusing or similar marks. For a more detailed discussion of the protection and use of IP in Canada, see the “Intellectual property” chapter.
Under Québec law, any “inscription” on a product, as well as signs and commercial advertising, must be in the French language. The legislation provides an exception, however, for “recognized” trademarks within the meaning of the Trademarks Act — unless a French version has been registered. However, recent amendments to the Regulation respecting the language of commerce and business intended to ensure the “sufficient presence” of the French language on storefront signage have greatly restricted the application of this exception in Québec.
or many years, retailers in Québec had relied on the “recognized” trademark exception to display English-only trademarks on public signs, posters and commercial advertising. This position became the subject of court proceedings when the Québec regulator — the Office of French Language (the Office) — began a series of highly publicized enforcement actions against a number of retailers using English-only signage, on the basis that the exception does not apply to commercial signage.
According to the Office, English-only trademarks used to designate business names on commercial signage in Québec were required to be accompanied by a French generic descriptor, phrase or expression. The retailers launched a court challenge that ultimately made its way to the Québec Court of Appeal, which ruled in favour of the retailers — concluding that they could rely on the “recognized” trademark exception, and were not required to add French descriptors to their non-French trademarks on storefront signage.
However, in May 2016, the Québec government published amendments to the French language regulations in an effort to ensure visibility of the language throughout the province. As of November 24, 2016, where a trademark is displayed outside an “immovable” property “only in a language other than French”, a sufficient presence of French must also be ensured on the site, in accordance with the regulations. The new rules apply to trademarks displayed outside an “immovable” property (defined as “a building and any structure intended to receive at least one person for the carrying on of activities, regardless of the materials used, excluding a temporary or seasonal facility”) only in a language other than French, such as:
The new rules provide that a “sufficient presence of French” may be ensured in one of three ways: (i) a French generic term or description of the products and/or services concerned, (ii) a French slogan or (iii) any other term or indication — although preference should be given to the display of information pertaining to the products and/or services to the benefit of consumers or persons frequenting the site. The French generic terms, slogan or other description must also be permanently visible and shown in the same visual field as that of the sign or poster bearing the non-French trademark. The new regulations affect all companies with an establishment in Québec that display a non-French trademark in the absence of a French generic term, slogan or description outside their premises.
4. Environmental claims
Among the enforcement guidelines issued by the Competition Bureau, as noted previously, are guidelines on the use of environmental claims in advertising. Published by the Bureau in conjunction with the Canadian Standards Association, these guidelines discourage the use of unsubstantiated and vague environmental claims — such as “eco-friendly” and “environmentally friendly” — stating that such claims may only be used if they detail the exact environmental benefit in such a way that it can be verified in relation to the specific product.
Through the use of commentary and practical examples, the guidelines provide instruction on the proper use of certain common environmental claims and symbols. “Green” marketers in Canada must ensure that all environmental claims are true — not only in relation to the final product, but also in relation to all relevant aspects of the product’s life cycle (i.e., there must be an overall net positive impact on the environment).
5. Contests and promotions
The legal rules that govern contests and promotions in Canada contain a number of unique provisions. “Lotteries” — i.e., any scheme that awards a prize based on chance and/or where money (or another valuable “consideration”) is paid to participate — are illegal under the Criminal Code.
To avoid being considered an illegal lottery, a contest must include a skill-testing element — commonly a mathematical question — and generally must provide a no-purchase entry option. The Competition Act also mandates disclosure of certain material information about the contest, including any regional allocation of prizes, odds of winning and prize values.
Special considerations also apply for contests open to Québec residents. In addition to its French language rules for advertising, Québec is currently the only jurisdiction in Canada that imposes payment of duties, a security bond and requires certain pre- and post-contest filings for contests open to its residents.
6. “Sale” claims
In order to advertise a “sale” price in Canada, you must have established a “regular” price at which either (i) a substantial number — i.e., more than 50 per cent — of the items have been sold during the relevant time frame (known as the “volume test”), or (ii) the item has been, or will be, offered for sale in good faith for a substantial period of time — i.e., more than 50 per cent of the relevant period (known as the “time test”).
Even if the term “regular price” is not used, any higher price referenced directly or indirectly in a “sale” advertisement will be considered the “regular price” of the product or service in question. If this amount is not identified as the seller’s own regular price, it will be considered to be the price that other sellers in the market generally charge for the same product or service.
Due to the difficulty of predicting the volume of “regular price” sales of any product or service, most retailers in Canada do not rely on the volume test. Instead, they typically use the time test, in which they keep track of the length of time that each item is offered at a price lower than the ordinary selling price, and ensure that this “on sale” period is less than half of the relevant period. The relevant period can be a six-month, 12-month or even a quarterly period, provided that the items are not seasonal and that the time period is followed consistently.
7. Puffery and hyperbole
In Canada, the scope for arguing that an advertising claim is just “puffery” — a hyperbolic boast, or a vague and purely self-congratulatory statement of opinion — is probably narrower than in certain other jurisdictions, the U.S. in particular.
If the claim can be seen as relating to the performance, efficacy or length of life of the product, it cannot be made without substantive evidence of an “adequate and proper test” to support it. As well, if the claim can be interpreted as likely to influence the consumer’s purchase decision, in terms of the general impression it creates, it cannot be dismissed as simply “puffery.” However, if a claim is so exaggerated or fanciful that no reasonable consumer would ever take it seriously, or if it is clearly expressed solely as a matter of opinion not subject to objective assessment, even Canadians — and our courts — may be prepared to dismiss it as a “mere puff.”
8. Canadiana issues
Canadian regulations also extend legal protection to certain symbols and icons of Canada. For example, the use of real or costumed RCMP officers, or the words “Royal Canadian Mounted Police,” “RCMP” or “Mountie” in advertising requires consent from the RCMP. Additionally, the use of images of the Canadian flag, the 11-point maple leaf symbol, coins and bank bills in advertising is subject to certain conditions or limitations. However, the national anthem, “O Canada,” is in the public domain and is therefore fair game.
9. Advertising in Québec
Beyond the above-mentioned language issues, Québec has a unique culture and heritage, which it has tried to protect through a number of regulations. The most important regulation for foreign advertisers to note is Québec’s Consumer Protection Act, as it applies to anyone who advertises or sells products or services to consumers in Québec, and imposes strict requirements on the nature and accuracy of advertising. Many Canadian advertisers choose not to open contests to Québec residents due to the additional rules enforced by the province’s alcohol and gaming authority, the Régie des alcools, des courses et des jeux. In many cases, national advertisers are forced to make a choice: create parallel advertising campaigns for English and French Canada, or miss out on advertising to the second-most populous Canadian province.
Québec law also prohibits — with limited exceptions — commercial advertising directed to children under 13 years of age. Food-related advertisements directed at children appear to be of particular concern, especially for the Quebec Weight Coalition (Coalition québécoise sur la problématique du poids), a consumer advocacy group that has filed numerous complaints with the Office de la protection du consommateur.
10. Penalties for false and misleading advertising
The Competition Bureau is empowered under the federal Competition Act to pursue administrative remedies in relation to misleading advertising and other deceptive marketing practices. The Bureau also has the ability to prosecute misleading advertising, where misrepresentations are made knowingly and recklessly, as a criminal offence.
In most cases, the Bureau will deal with misleading advertising as a civil offence. This route offers a wide range of enforcement remedies, including cease-and-desist orders, the required publication of information notices — i.e., corrective advertising — directed to affected parties, and/or administrative monetary penalties.
For a first offence, corporate offenders may face penalties of up to $10 million. For subsequent offences, corporations face up to $15 million in penalties. Under the civil route, the Bureau does not need to prove — as it would in a criminal proceeding — that the false or misleading advertising was engaged in deliberately or recklessly. The potential penalties under the criminal provisions include fines and jail.
11. Private remedies for false and misleading advertising
In addition to certain remedies available under the common law — e.g., trade libel — or an action for copyright/trademark infringement, the Competition Act provides a statutory right of civil action for damages suffered as a result of misleading advertising. However, proof that the advertiser acted “knowingly or recklessly” is required.
The relevant provision of the Competition Act has also been used as the basis for obtaining injunctions in misleading advertising cases. The basic test for obtaining an interlocutory injunction in Canada requires that:
Ad Standards (previously Advertising Standards Canada), the country’s main self-regulatory body for the advertising industry, also administers a confidential trade-dispute procedure for comparative advertising disputes, which is not unlike the NAD process in the U.S. In the right circumstances, it can offer a lower-cost and relatively expeditious alternative to litigation.
12. Canada’s Anti-Spam Legislation
On July 1, 2014, Canada’s Anti-Spam Legislation (CASL) came into force, with significant implications for advertisers wishing to promote their goods or services through the use of “commercial electronic messages” (CEMs) sent to an “electronic address” — including email accounts, instant-messaging accounts and other analogous technologies.
CASL prohibits the sending of a CEM to a recipient unless the sender has either the express or implied consent of the recipient to do so — CASL stipulates conditions for obtaining express consent and sets conditions for what will constitute a valid “implied” consent under the legislation. It also imposes certain message disclosure requirements on the sender and requires that recipients are given the ability, at no cost, to unsubscribe from receiving CEMs in future. CASL also amends the Competition Act to make it an offence to send a CEM that is false or misleading in a material respect, or to send or make a false or misleading representation in the sender information, subject matter information, URL or other locator of a CEM.
The Canadian Radio-television and Telecommunications Commission has begun enforcement of the legislation after being inundated with consumer complaints as soon as it came into force. To that end, numerous undertakings and notices of violation have been issued with regards to the application of Canada’s Anti-Spam Legislation. For a more detailed discussion of the legislation and its requirements, see the chapter on CASL.
13. Digital marketing
From native advertising to behavioural advertising, to new social apps, platforms and tactics, the digital world is constantly evolving and giving rise to complex and unique legal challenges. Unfortunately, Canada is currently lagging behind some other jurisdictions in terms of providing organizations with direct guidance on how to navigate a digital sphere that is littered with legal landmines. That said, there are resources available that help provide valuable insight into digital marketing practices in Canada.
One such resource is the Competition Bureau’s Deceptive Marketing Practices Digest, which speaks to issues such as the need to disclose a “material connection,” making proper disclosures in digital marketing and how to avoid deceptive practices such as “astroturfing” — commercial representations that masquerade as the authentic experiences and opinions of impartial consumers, such as fake consumer reviews and testimonials. Furthermore, the Office of the Privacy Commissioner of Canada has released its Guidelines on Privacy and Online Behavioural Advertising, which are designed to help organizations involved in online behavioural advertising ensure that their practices are fair, transparent and in compliance with Canadian law. Ad Standards has also published its Interpretation Guideline #5 – Testimonials, Endorsements, Reviews, intended to provide greater guidance on the ever-evolving world of (misleading) endorsements and paid-for content and the disclosures required in order for a testimonial, endorsement, review or other representation to be compliant with the Canadian Code of Advertising Standards – guidelines which also reference the FTC’s Guide to Testimonials & endorsements and the Word of Mouth Marketing Association’s White Paper – Ethical Word of Mouth Marketing Disclosure Best Practices in Today’s Regulatory Environment.
14. Product regulatory compliance
Foreign companies wishing to enter the Canadian market must be mindful of the spectrum of regulatory considerations that affect the manufacturing, processing, packaging and labelling, sale and distribution of products that are regulated at the federal and/or provincial levels in Canada, such as textiles or upholstered products, cosmetics, food, beverages and natural health products/dietary supplements.
In addition to meeting the packaging and labelling requirements identified above, products may also have to meet certain compositional requirements, and the product and/or company may require a license or registration to be legally advertised or sold in Canada.
For instance, the prevalent use of non-French trademarks on storefront signage, the federal Cosmetic Regulations, C.R.C., c 869, imposes notification requirements on manufacturers and importers, obliging them to file a Cosmetic Notification Form (CNF) with Health Canada within 10 days of first selling a cosmetic product in Canada. In addition, certain ingredients are prohibited or restricted for use in cosmetic products, and may result in the product being prohibited in Canada, or classified as a natural health product or non-prescription drug.
Moreover, the Natural Health Products Regulations, SOR/2003-196, imposes licensing requirements applicable to any person or company that manufactures, packages, labels and/or imports natural health products for commercial sale in Canada. In addition, the province of Quebec requires wholesalers and distributors of certain types of food products, such as meat and dairy products, to obtain a permit pursuant to the Food Products Act, CQLR c P-29 and the regulation respecting food, CQLR c P-29, r 1.
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