Manufacturing Success Seminar - April 29, 2015

The People
Edward Majewski & John Illingworth

The People
• Teach us about your business (over lunch)
2

The People
• Due diligence when hiring
• Background checks
• Googling
• Legal databases
• Be careful about what recruiters say
4

The People
• Written employment agreements/offers
• No inducement
• Not subject to any restrictive covenants
• Can’t disclose former employer’s confidential
information
• Termination clauses are good idea, but are being
closely scrutinized by judges
• Restrictive covenants → ‘less is more’
5

The People
• Statutory Compliance
• ESA class actions
• Due diligence in M&A
6

The People
• Human Rights
• Increase in frequency of complaints
• HRTO very sensitive to employees with mental illnesses
• Accommodation due to “family status” is evolving rapidly
(and not in way that’s pro-business)
• Managers/supervisors being named as personal
respondents
7

The People
• Social Media
• Don’t be mesmerized by the technology
• Duty of loyalty and confidentiality still apply even if
employees are engaging in social media outside of
working hours and on their own devices
• Teach your employees about its dangers
• Securities law
• Defamation
• Don’t turn unpaid tweeting into paid work
• Don’t tolerate cyber-bullying
8

The People
• OHS
• Violence and Harassment – an update
• Is jail time a new trend?
• Mental Stress under WSIB – what is the future?
9

Thank You
montréal  ottawa  toronto  hamilton  waterloo region  calgary  vancouver  beijing  moscow  london
Edward Majewski
Partner, Gowling Lafleur Henderson LLP
Tel: 416-862-4422
Email: edward.majewski@gowlings.com
John Illingworth
Tel: 519-575-7507
Email: john.illingworth@gowlings.com

The Products
Chris Oates, Melissa Tehrani, Kevin Sartorio & Shelagh Carnegie

Advertising Pitfalls - Contests,
Promotions, Personal Information
and SPAM

13
Contest or Illegal Lottery?
Contests where prizes are awarded by chance alone are
“illegal lotteries” under the Canadian Criminal Code
• To avoid being classified as an illegal lottery, create a game
of mixed chance and skill or skill alone
Can you force a purchase?
• NOT IF the prizes consist of goods, wares or merchandise
(even if they don’t, the law is uncertain)
• NOT IF the prize is of a greater value
than the consideration… and some win
because others lost

14
“Surprise and Delight”
Is it a contest?
• “Surprise and Delight” campaigns are those where individuals are
given promotional gifts arbitrarily in order to surprise and delight
them
• These may or may not be a contest, depending on if and how the
campaign is publicized, or if there is any rule-bound mechanism
for awarding prizes – is there an implicit contract with consumers?
• If recipients are arbitrarily chosen by someone without prior
notification, then may not be a contest and don’t need to follow
normal contest laws

15
Some Important Clauses:
• Allow the contest sponsor to cancel the contest in
case of any problems or errors, at the sponsor’s
discretion
• Make sure contestants release the sponsor and their
related agencies, officers, and employees from
liability
• Contestants should confirm they have read the rules
and are over the age of majority in their province or
territory of residence, or have the consent of a parent
or guardian
• Allow the sponsor to make prize substitutions for a
prize of equal or greater value, at the sponsor’s
discretion
• Allow the sponsor to give the winner permission to
transfer the prize, at the sponsor’s discretion
• If the contest is open to Quebec residents, make
sure to include the Régie’s required clause!
Bullet-proofing Clauses

16
Key Privacy Principles
Canadian private-sector privacy statutes impose similar
obligations with respect to personal information. Privacy
legislation:
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 purpose(s) identified; and
3. Requires that personal information be collected by fair
and lawful means.

17
Collecting Personal Information
The overarching principles of privacy law apply
regardless of where personal information is collected:
Generally, Canadian privacy law is technology neutral. Always:
• Disclose the purposes for which you collect information;
• Obtain consent to these purposes;
• Use personal information only in accordance with the purposes
disclosed;
• Provide adequate security for the information you collect,
proportionate to its sensitivity.

18
Regulatory Framework
A note on ‘Public’ Information
Personal Information that can be accessed from a ‘public’ source
remains subject to the requirement for consent in most cases.
PIPEDA provides only limited exceptions:
• A name, address and telephone number in a
telephone directory
• A name, title, address and telephone number in a
professional or business directory
• A registry collected under statutory authority or a
record/document of a judicial body
• A publication including a magazine, book or
newspaper available to the public, where the
individual provided the information.
If the individual can refuse to have
their information in the directory.
If the information is used for the
purpose for which it appears in the
directory.
If the information is used for the
purpose for which it appears in the
registry or document.

19
Canada’s Anti-Spam Legislation
The provisions of CASL regarding electronic messages came
into force on July 1, 2014. CASL takes a prohibitive approach to
“Commercial Electronic Messages”, prohibiting all but those that
comply with its requirements.
In the post CASL world, companies must review the manner in
which they seek consent to send messages, and must assess
their ability to continue to rely on historical lists- if these steps
have not already been taken.
Under CASL:
• Electronic messages require consent from the
recipient, either express or implied;
• Messages must contain prescribed
disclosure; and
• Messages must contain an unsubscribe
mechanism in prescribed form.

20
Canada’s Anti-Spam Legislation
To which messages does CASL apply?
CASL applies to Commercial Electronic Messages (“CEMS”) that are
sent by any means of telecommunication, including a text, sound, voice
or image message, to an “electronic address”:
• an electronic mail account;
• an instant messaging account;
• a telephone account; or
• any similar account.
“Any similar account” captures certain new forms of communication, such as
social media. The key question is whether the message is sent to something
akin to an “electronic address”. Messages that are not sent to an electronic
address are not subject to CASL.

The CRTC’s Position on Express Consent
• The CRTC takes the position that express consent must be “positive or
explicit”.
• Note that a check box is not specifically required, other mechanisms that
amount to an explicit indication of consent may be used.
21

22
Message Content Under CASL
Prescribed Disclosure Requirements for Electronic Messages
1. The name under which the person sending the message and the
person on whose behalf the message is sent, if different, carry
on business, if different from their names, if not their names;
2. If applicable, an indication which person sent the message and
on whose behalf it was sent;
3. The mailing address, and one (or more) of a telephone number,
web address, or email address of either the person sending the
message, or if different, the person on whose behalf it is sent;
and
4. An unsubscribe mechanism.
Service providers sending electronic messages on behalf of third parties who do not have
material control over the message content or recipient list would not need to be identified.
The required contact information must remain current for a minimum of 60 days after the
message is sent.

Thank You
Chris Oates
Associate, Gowling Lafleur Henderson LLP
Tel: 416-369-7333
Email: chris.oates@gowlings.com

Charter of the French
Language

2
Charter of the French Language

Commercial Advertising:
26
Can be in another language provided French is
“markedly predominant”

Packaging and Labelling:
Every inscription on a product, on its container or on its
wrapping, or on a document or object supplied with it
must be drafted in French
27

Commercial Publications:
Catalogues, brochures, folders & similar publications
must be in French
28
Another language may also be used provided that the French
version is displayed at least as prominently as every other
language

Websites and electronic messages are assimilated
to “catalogues, brochures, folders & similar
publications”
 subject to the equal prominence rule
29

Advertising to Children
30
Since 1978, the Quebec Consumer Protection Act has
prohibited commercial advertising to children under
thirteen years of age
According to a study, children between the ages of 3 and 5 years old
show an “emerging ability” to use ads to judge which products will be
the most “fun” and make them popular – even if they can’t read yet!
At the age of 4, the majority of kids
are able to recognize hundreds of logos
Canadian children between the ages of
2 to12 spend $1,5 billion of their own
pocket money each year

31
The Rule:
Commercial advertising directed at children
under 13 years old is prohibited in Quebec!
Factors to consider when assessing whether an ad is “directed
at children”:
• Nature and intended purpose of the good advertised
• Manner of presenting the advertisement
• Time and place it is shown, and
• The general impression
N.B. The ban also applies to those who design,
distribute, publish or broadcast the advertisement.

32
The Exceptions:
• Ad appears in a magazine/insert directed at children and meets
various conditions (e.g. magazine/insert is for sale and published
at least quarterly, ad meets the requirements of section 91
Regulations)
• Ad appears in a store window, on a display, container, wrapping
or product label and meets the requirements of section 91
Regulations
• Ad announces a programme/show directed at kids and the
advertisement complies with section 91 Regulations

Thank You
Melissa Tehrani
Tel: 514-392-9561
Email: melissa.tehrani@gowlings.com

Your Copyright is not Your Patent,
Industrial Design, Trade Secret or
Trademark.

The Five Main Areas of IP Rights
Copyrights
Patents
Industrial Designs
Trade Secrets
Trademarks
All are intangible Property but differ significantly
Understand their differences. Take advantage.

Copyright
Copyright is the exclusive right to reproduce,
publish and perform in public an “original”
literary, artistic, musical or dramatic work.
(e.g. books, photos, songs, videos, software,
doodles, web or social media content,
charts/tables of info)

Copyright
An “original” work is the product of skill and
judgment that is not a mechanical reproduction
of another work.
Low threshold.

Copyright
Lasts in Canada life of author plus 50 years
No need to register copyright to own it (but good
idea).
No need to deposit copyright with government in
Canada.

Copyright
Acquire copyright by being:
(a) the author of the work;
(b) the author’s employer; or
(c) assignee of copyright by way of signed
written agreement.

Copyright
Make sure your employment agreements are
clear that you own employee works.
Get assignments in writing at time of any third
party commissions.
Canada does not recognize “work for hire.”
Avoid relying on that term in agreements.

Copyright
Copyright is infringed by anyone who
reproduces a substantial part of your work
without your permission.
Includes assessment of quantity and quality.

Copyright
Focus on registering copyright for your key
assets that are likely to be targets of
infringers/competitors. Provides litigation
advantages.
Use copyright notices “© Copyright, (Year of
Creation), (Owner of Copyright)”

Patents
A patent is the right to exclude others from
making, using or selling a new, useful and non-
obvious thing.

Patents
A patent is the right to exclude others from
making, using or selling a new, useful and non-
obvious thing.
Processes (a business method; chemical refining method)
Machines (a better mouse trap)
Compositions of matter (new plastic; new drug)
New uses for old things

Patents
New (“Novel”) – the technology was not
previously known to the public.
“Useful” – it has to have a useful purpose and
not mere entertainment
Non-Obvious – a skilled workman would not
have come up with the same thing without
inventive effort

Patents
Must apply for and obtain a patent in order to
have patent rights.
Term is 20 years from application filing.
Can be expensive to achieve but of potentially
enormous value.

Patents
Canada and most other countries are “first to
file” as opposed to “first to invent.”
Don’t delay in applying.
Disclosing to others (without confidential
agreement in place) may make it harder to get
patent rights (destroys novelty)

Patents
At the same time, if you don’t ever disclose
(trade secret) then may not need to get a patent
(to be discussed)

Industrial Designs
Industrial designs are obtained to protect how a
useful article looks; not how it works.

Industrial Designs
The useful article may be old. Industrial designs
protect new looking bicycles, even those that
work the same as old bicycles.
Third parties can sell bikes. Just not ones that
look like yours.

Industrial Designs
Industrial designs do not protect shapes that are
dictated by utility.
Cannot get an industrial design to protect a bicycle
wheel that is a perfect circle. That is purely
functional.
Patents protect purely functional things. Must be
new, useful and non-obvious. Can patent a circular
wheel that you have figured out how to last longer.

Industrial Designs
Industrial designs must be registered. Last up to 10
years.
Must be a degree of originality to the design.
Shape and appearance of your bicycle must not
closely resemble those already in the market.

Trade Secrets
Trade Secrets or Confidential Information
Do not need to be registered.
Under some circumstances, the law prevents
someone from using or disclosing information
you have kept confidential.

Trade Secrets
Almost anything can be considered confidential
information.
- Recipes/manufacturing formulas
- Internal business methods
- Financial information
- Customer lists
- Any information or tech that gives your business a
competitive advantage

Trade Secrets
Courts look at:
- extent information known by anyone else
- measures taken to guard it

Trade Secrets
Courts look at:
- value of the information to you or others
- time/money spent developing it
- how easily someone else could duplicate or
acquire the information from public means

Trade Secrets
Obligation of confidence can arise by:
1. Express or implied contract/agreement.
2. By relationship
- employees to employers
- by marriage
- fiduciary relationships (e.g. high level top
managers in a business)

Trade Secrets
The secret information loses its protection if you
disclose it to the public.
Use carefully drafted NDAs.
If information is useful technology and it risks
becoming disclosed, immediately look to
consider applying for patent rights.

Thank You
Kevin Sartorio
Tel: 416-862-4492
Email: kevin.sartorio@gowlings.com

Protecting your Brand as you
Grow your Business:
Common TM Issues and How to Deal with Them

Trademark Law Basics
• Trademark Law
• Protects marks that are used to distinguish the goods or
services of one entity from another (indication of source)
• Aims to prevent confusion among consumers and protect
the goodwill associated with these marks
• A Trademark Can Be…
• Word, sign/symbol, logo, design, etc.
• New Act will permit tastes, scents, textures, holograms…
66

Common Law vs. Registered TM Rights
• Two types of trademarks
• Common law trademarks
• Registered trademarks
• No requirement to register a trademark
• However, rights associated with registered trademarks
are more extensive, so generally advisable to do so
67

Common Law vs. Registered TM Rights
Common Law Trademarks:
• Unregistered trademarks
• Rights acquired simply through adoption and use
• Rights are more narrow than registered rights:
• limited to the specific…
• Geographic region;
• Goods and services; and
• Format/design
…with which the mark has acquired a reputation
• Enforcement requires extensive evidence to prove this
reputation
68

2
Registered vs. Common Law TM Rights
Registered Trademarks:
• A trademark formally entered on the Trademarks Register
• Registration provides:
• Exclusive right to use the trademark across Canada in
association with the wares/services listed
• Notice to the public of the registrant’s claim of ownership
of the trademark
• Prima facie evidence of the registrant’s ownership of the
trademark
• Access to additional rights of action under the Trade-
marks Act…
• …among other benefits!

Protecting Your Brand:
Knowing How and How Not to Use Your
Trademarks

Protecting Your Brand
• Marking your Trademarks:
• Unregistered trademarks - marked with the ™ symbol
• Registered trademarks - marked with the ® symbol
• Legal Lines
• Statement on packaging, etc. that provides public
notice of an owner’s trademark rights
• Ex. “GOWLINGS PRACTICAL® is a registered trademark
of Gowling Lafleur Henderson LLP”
• Particularly valuable when a trademark is being used
under license – presumption of a valid license
71

Protecting Your Brand
• Using Your Trademark Properly
• DO NOT alter or pluralize your trademark
• Distinguish the trademark from surrounding text by
using distinctive lettering (ex. upper case, bold, etc.)
• Ex. “X-BRAND shoes” rather than “x-brand shoes"
• Use trademark as an adjective modifying the name of
a product or service (rather than as a noun)
• Ex. “X-BRAND database software is the market leader”
rather than “X-BRAND is the market leader”
72

Trademarks & Comparative
Advertising

Comparative Advertising
• Comparative advertising involves the direct
comparison of a sponsored brand to a
competitive brand in an advertisement
• Invokes several areas of law, including competition
law, trademark law and copyright law
74

Trademarks and Comparative Advertising
Section 22 of the Trade-marks Act
• Section 22 of the Trade-marks Act prohibits a person from
using a trademark registered by another person in a manner
that is likely to have the effect of depreciating the value of the
goodwill in the mark
75

Section 7 of the Trade-marks Act
• s. 7(a) provides that “no person shall make a false or misleading
statement tending to discredit the business, wares or services of a
competitor.”
• Applies to owners of registered and unregistered trademarks
• There are 3 essential elements to satisfy the provision:
1) a false or misleading statement;
2) tending to discredit the business, wares or services of a competitor; and
3) resulting damage
76

Clairol v Thomas Supply & Equipment
• Plaintiff owned several registered trademarks in association
with wares (hair colouring preparations)
• Defendant used these marks on a hair colour comparison
chart on packaging and on a brochure inside packaging
• Use on packaging held to violate s.22
• Use on brochure not prohibited because, according to s.4(1) of
the Act, a mark is only used in association with wares if it is
visible to consumers at the time of purchase
77

Other IP issues: Copyright
• Reproducing a competitor’s label, logo or packaging in a
comparative advertisement may amount to copyright
infringement even if TM law not violated
• Need to obtain release or license for every use of a copyrighted
work in an advertisement
78

Take Away Messages:
• DO NOT use another party’s trademark in a way that is
likely to depreciate the goodwill giving that trademark
value
• DO NOT use a competitor’s trademark in comparative
advertising if it is registered for services
• In the case of wares, exercise caution in using another’s
mark on the product itself, on product packaging or at
point of sale displays (as opposed to in an ad)
• DO NOT forget about requirements of copyright and
competition law!
79

Compatibility Claims
Compatibility claims:
• Statements made by one party that its products can be
used with or are compatible with the goods of another
party
• Ex. “Brand X parts work with Brand Y products”
81

Nintendo of America Inc. v Camerica Corp.
• Plaintiff owned NINTENDO and related trademarks in
association with video games
• Defendant introduced product called “Game Genie”
• Packaging included notice that the product was
compatible with plaintiff’s video games; NINTENDO
trademark appeared on packaging
82

Nintendo of America Inc. v Camerica Corp.
• Plaintiff argued that defendant was depreciating the
value of the goodwill in Nintendo’s marks
• Court rejected argument, noting:
• (1) Products were not competitive, as in Clairol
• (2) Disclaimer on product packaging was unequivocal:
• Game Genie is a product of Camerica and “not
manufactured, distributed or endorsed by Nintendo of
America Inc.”
• Therefore, public would understand that product originated
from Camerica and not Nintendo
83

Take Away Messages:
• Exercise greater caution when using another party’s mark in
association with a competing (and not simply compatible)
product
• Make it abundantly clear that the display of the trademark
does not signify that the goods are those of the other
trademark owner
• Disclaimers have an important role here
• DO NOT reproduce logos even if you are not violating any
TM laws since you may be infringing copyright
• Use only corporate name if possible
84

Thank You
Shelagh Carnegie
Tel: 416-862-4682
Email: shelagh.carnegie@gowlings.com

The Profits
Bob Armstrong, Nicholas Kluge & Sandra Barton

Risk and Crisis Management
• What is the difference between risk management
and crisis management?
87

• Risk management is proactive:
• Identify risks before a crisis occurs
• Put measures in place to reduce the likelihood that the
risk will materialize
• Develop a plan for managing the risk if it does
materialize
88

• Crisis management is reactive:
• Risk has materialized
• It has or will become public
• You have to control:
• Harm to the public
• Damage to the company
89

Managing Risk
• Importance of Managing the Risk
• Minimizes chance of risk materializing
• Provides evidence of your due diligence before the
crisis develops in the event you are sued for:
• Negligence
• Breach of a regulatory standard
• Breach of contract
• Prepared and ready to manage a crisis if one should
arise
90

Managing Risk
• 4 Key Steps To Risk Management
• Identify your Vulnerabilities
• Prepare proactive Measures to Minimize Risk
• Create a Crisis Management Team
• Create a Crisis Management Plan
91

Managing Risk
• First Step – Identify where are you most
Vulnerable?
• Privacy of consumer information - breach of data security
• Error in manufacturing or contaminated process leading to a
product recall
• Reputational risk and loss of credibility
• Incorrect public and regulatory disclosure
• Large machinery – workplace safety
• The public, regulators, lenders and shareholders may forgive
you for an accident but they are unlikely to forgive you for
arrogance, insensitivity or lack of preparation.
92

• “Going through the crisis there are two advisers
I’ve paid no attention to. The first are the
lawyers, and the second are the accountants. It’s
not about money or legal liability; this is about
our being accountable for providing consumers
with safe food. This is a terrible tragedy. To
those people who have become ill, and to the
families who have lost loved ones, I want to
express my deepest and most sincere
sympathies. Words cannot begin to express our
sadness for your pain.”
- Michael McCain on the listeriosis outbreak
93

Managing Risk
• Second Step - Proactive measures to minimize
risk
• Consulting stakeholders, employees, industry experts
and legal advisors
• Creating policies and/or protocols to be followed
• Creating systems to ensure policies or protocols are
followed
• Training employees on policies and protocols
• Develop communications strategy
• Anticipate litigation
94

Managing Risk
• Third Step – Create a Crisis Management Team
• May need different people for different crisis
• You will always need
• Core group of senior managers
• communication specialists
• legal advisors
• subject matter experts
95

Managing Risk
• Fourth Step – Create a Crisis Management Plan
• It’s a “blue print” or “game plan” for crisis management
• It provides for well-thought out decisions made in
peaceful times
96

Managing Risk
• Your plan should:
• Define the range of crises that can occur
• Identify tasks to be performed in the crisis
• Assign responsibility for each task
• Ensure plan is capable of being implemented at time of
crisis
97

Crisis Management
• What is A crisis? You certainly know one when
you see one …
98

First Example of Crisis Management: Product Recalls
• One of the most obvious places in manufacturing
where the standard of care comes into play is when
deciding if, and how, to institute a product recall
• First consideration is the defect: is there a danger to
health, or simply that the product doesn’t work in the
way it should?
101

Product Recalls
• Key considerations in deciding whether to
institute a recall when there is a danger to health
• How severe is the effect?
• How likely is it to happen?
• If it is likely to happen, how often will it happen?
• Risk benefit analysis
102

Product Recalls
• Risk Management Protocol
• needs to set clear chains of reporting for product recall
purposes
• How high up the chain the notification goes must
depend on:
• Severity of incident
• Frequency of incident
• This ensures right decision makers are informed as
soon as possible
103

Case Study – Blue Bell Creameries
• Blue Bell
• Number 3 producer of ice cream in the United States
• Products marketed in 23 different states
• One particular product was found to contain listeria
bacteria
• A total of 10 cases of listeria illnesses reported – 3 deaths
• Immediate recall of all products, everywhere. Overkill?
105

Product Recalls
• Consequences of Recalls – the Double Edged
Sword
• Can limit liability
• Can also be a magnet for legal proceedings
• Plaintiffs’ counsel are entrepreneurs
• Product recalls
• are an invitation for a lawsuit
• are often seen as an admission of fault with respect to
the product
106

Case Study – Vioxx and Celebrex
• Two drugs did essentially the same thing
• Questions raised as to potential harmful effects
including risk of stroke
• Merck withdrew Vioxx, Pfizer kept Celebrex on the
market
107

Vioxx and Celebrex
• Merck settled claims in the US for $4.85 billion and
in Canada for $33 million
• Pfizer continues to market Celebrex, and settled
claims in the US for $894 million and in Canada for
$12 million
• As of 2013 annual US sales of Celebrex over $2.1
billion
108

Litigation Risks – Class Actions and Privacy
• Who should have privacy concerns?
• Do you keep employee information?
• Do you make sales to the public?
• Do you collect financial information about individuals?
• Do you have access to or store medical information?
• Do you have location/tracking capabilities?
109

• Sources of Privacy Claims
• Privacy Statutes
• Federal
• Provincial
• Torts
• Intrusion on Seclusion
• Negligent Breach of Privacy
• Breach of Confidence
110

• Statutory Causes of Action
• PIPEDA (Federal)
• Finding by Commissioner can be used to support a law
suit
• Private cause of action is coming
• Privacy Statutes
• BC, Sask, Man, Nfld
“It is a tort, actionable without proof of damage, for a
person, wilfully and without a claim of right, to violate the
privacy of another” – BC Privacy Act
111

• Ontario - PHIPA
• Damages for actual harm
• Damages up $10,000 for mental anguish where breach
was done willfully or recklessly
• Not a complete Code – ONCA Hopkins
112

• Common Law Causes of Action
• Intrusion on seclusion
• Negligent breach of privacy
• Breach of Confidence
113

• Damages
• Negligent breach and breach of confidence – damages
have to be proven
• Intrusion on Seclusion
• Actual damages do not have to be proven
• I REPEAT
• Actual damages to not have to be proven
• No loss – damages limited to $20,000
114

• Privacy Cases brought as Class Actions –
Statutory Breaches
• Douez v Facebook
• Facebook’s liability under statute certified as a common
issue
• Ladas v Apple
• Not certified - may be because of poorly drafted
pleadings
115

• Privacy Cases brought as Class Actions –
Intrusion on Seclusion
• Employee for Minister of Human Resources lost encrypted
hard drive with student loan information – certified
• Bank employee’s girlfriend disseminated highly confidential
information to 3P fraudsters (identity theft and fraud) - certified
• Employee of the health authority accessed information of over
1000 patients with no valid reason
• Strip searches on forensic psychiatric patients
116

• Here’s why a seemingly small breach can be so
costly:
• Reputational Harm
• Litigation Risks
• Damages and cost awards
• Class actions consolidate relatively small
claims to create a substantial liability
• Internal Resources expended
• To respond to litigation
• To recover lost data
• Repair or replace IT systems
117

• Class Actions Arise
• Inadvertent disclosure
• Challenges to business practices
• Insufficient protective measures in place (i.e. allowed
hackers etc. to access data)
• Collection and or use of information without consent
• Breached privacy policy (breach of contract)
118

• Risk Management – Preventing Breaches –
Where are you Vulnerable?
• Stolen or lost property (laptops, blackberry, i- Phone,
USB key)
• Insufficient policies, practices and monitoring
• Breakdown in technology
• Data transfer, including domestic and international
outsourcing
119

• Standard of Care
• Consent
• Inform party of uses to which information will be put
• Limit use to
• what is necessary
• what party has consented to
• Policies
• Use of simple password alone, not enough
• Leaving laptop unattended
• Encryption for sensitive data
• May also need to be able to destroy remotely
120

• Training
• Employee awareness of privacy issues, policies and
procedures
• Systems in place to monitor data protection
121

Conclusion
• You may look at these suggestions and say that you
do not really need to follow them. You may view
them as unnecessary insurance.
• However, a crisis is very much like a flood or a
hurricane. It happens with little notice and the
consequences can be tragic if preparations have not
been put in place.
122

Conclusion
• When dealing with crises, litigation and other high risk business
choices clients need to remember the following considerations:
• Implement the plan you created
• Communication transparency
• Use creative approaches to problem resolution
• Management of your legal risk
• Cost controls
• Managing your business during a crisis is often forgotten
123

Conclusion
• Crisis management is only effective if it reflects the landscape
in which it operates
• Remember to communicate quickly and clearly with your
stakeholders and be:
• Authentic
• Transparent
• It is all about creating TRUST
• Your core stakeholders will determine the consequences of the
crisis for your organization
124

The Politics
Nurhan Aycan, Kelley McKinnon and Tim Hutzul - ShawCor Ltd.

The Limits of Legal
Privilege for In House
Counsel

2
In House Privilege in Canada
• In Canada, solicitor-client privilege applies to
communications involving in house counsel in
the same way it applies to communications
involving external counsel
• Solicitor-client privilege will not apply to advice
given by in house counsel in a non-legal
capacity

In House Privilege in Canada
• In determining if in house counsel
communications are privileged, courts will
consider the following factors:
• The nature of the relationship between the lawyer and
the client;
• The subject matter of the advice; and
• The circumstances in which it is sought and rendered
128

4
Factors In Privilege
• Business department head sends a memo
addressed to both legal and land departments
outlining facts and asking for their views

5
• Memo from counsel is focused on how the
company can minimize criticism in the context of
a public inquiry

6
• Memo from in house counsel dealing with legal
issues is addressed to the person who
requested it, and cc’d to numerous others in the
company

7
• Company has unearthed problems with apparent
bribery of foreign officials
• In house counsel circulates questionnaire to
numerous employees asking for confidential
responses to questions of a factual nature
• Are the completed questionnaires privileged?

8
• The recipient of a legal memo (not in legal
department) writes a memo of his own, with a
non-legal focus, in the course of which he/she
summarizes the contents of the legal memo
• Is any or all of the recipient’s memo privileged?

• Business person writes a commentary on a
memo from the legal department, disagreeing
with the conclusion; is this privileged?
• What if the writer agrees with the conclusion?
134

In House Privilege in the United States
• Generally the same as in Canada
• Majority of US courts test for privilege in US:
communications re subject matter of a legal
representation are protected if made by
employees to in house counsel at direction of
corporate superiors, and employees aware
they were being questioned so corporation
could receive legal advice
• Can be tied to the state in which the attorney
is licensed
135

In House Privilege in the European Union
• European Court of Justice held that under EU
law there is no “legal professional privilege” for
communications with in house counsel
• In-house lawyers not considered independent
• Akzo Nobel Chemicals and Akcros Chemicals v
Commission, C-550/07 P (Sept. 14, 2010)
• May apply to advice from lawyers outside EU
• To attract privilege in EU, communications must
have been prepared as part of a client's right of
defence by an independent lawyer who is a
member of an EU Bar Association
136

Top 10 Recommendations
1. Be clear as to role of lawyer in receiving or
making communications
2. Keep non-legal roles distinct from legal roles
3. Be clear respecting the purpose of the
communication (including meetings)
4. Avoid mixing privileged and non-privileged
statements in a single document or email chain
5. Limit distribution – communication regarding
privileged information should be done only on
a need-to-know basis
137

Top 10 Recommendations cont.
6. Keep physical control over copies of privileged
(or other sensitive) records
7. Educate senior non-legal personnel re what is
privileged and re importance of maintaining
confidentiality
8. Consider marking sensitive documents to show
intention to keep privileged
9. Use outside counsel for corporate
investigations
10. Consider jurisdictional issues
138

Questions, comments, concerns?
139

Thank You
Kelley McKinnon
Tel: 416-862-4432
Email: kelley.mckinnon@gowlings.com
Heather Cohen
Tel: 416-369-7297
Email: heather.cohen@gowlings.com
Nurhan Aycan
Tel: 416-814-5691
Email: nurhan.aycan@gowlings.com

Manufacturing Success Seminar - April 29, 2015

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