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Copyright Implications of AI, Canada’s Small Modular Reactor Ecosystem, Re-examining Canada’s Expropriation Framework and More…Timely Topics – September 2023

Timely Topics with McCarthy Tétrault curates the latest market trends on a monthly basis to help you stay informed of developments that can affect your business. This content is current as of September 5th, but please connect with us if you have any questions on any of the topics below.

Here are this month’s trending topics:

1) Copyright Does Not Protect Content Produced by Generative AI: Thaler v Perlmutter 

It has been a fundamental tenet of copyright law that for a work to be subject to copyright protection it must be the result of human authorship, however the bar for protection is low and varies from jurisdiction to jurisdiction. In Canada, for example, skill and judgement is required. In the United States a minimal level of creativity is required. With the rise of generative artificial intelligence questions have emerged as to whether content generated entirely using these programs can be protected as work under copyright legislation.

Barry Sookman, senior counsel and former Co-Chair of the firm’s Technology Law Group, examines the U.S. case, Thaler v. Perlmutter in his recent article, and the Courts decision that content generated without human involvement cannot be a work protected under the U.S. Copyright Act.

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Please connect with our Technology Law group to discuss the impacts of AI on your business.

2) Developments in Canada’s Small Modular Reactor Ecosystem

Canada’s commitment to achieving net-zero emissions by the year 2050 continues to call for additional sustainable energy sources. Achieving this substantial milestone will require the adoption and utilization of zero-emission energy technology such as nuclear energy and, in particular, small modular reactors (SMRs).

Canada’s investment and commitment to safe and efficient nuclear energy options, like SMRs, has only increased since the release of the Small Modular Reactor Action Plan and updates in the Federal Government’s Budget 2023 (which we previously discussed here). These current trends are also evidenced by the interprovincial Collaboration Memorandum of Understanding entered into by the provinces of Alberta, Ontario, Saskatchewan, and New Brunswick, the planning of new SMR projects, increased investment, and the federal incentive tax credits that demonstrate a willingness and even a desire to build out these technologies further. This is a welcomed shift in the Canadian energy landscape, for this generation and next.

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For further information on recent developments in each province and the Federal governments response we encourage you to read this recent article by McCarthy Tetrault’s National Energy Group.

3) Legislators and Courts Across the Country Continue to Re-examine Canada’s Expropriation Framework

On May 25, 2023, Quebec’s Minister of Transport introduced Bill 22: An Act respecting expropriation to replace the Expropriation Act, 1973. The Government of Quebec’s intention is to modernize and transform the procedural framework for the forced acquisition of private property for public purposes and the rules for setting compensation for owners. Bill 22 aims to simplify the expropriation process by reducing legal and regulatory hurdles, specifying new time limits, promoting cooperation between parties and granting new powers to the Administrative Tribunal of Québec. The renewed legislative attention to expropriation is accompanied by recent judicial consideration.

In October 2022, the Supreme Court of Canada (“SCC”) released a landmark decision in Annapolis Group Inc. v Halifax Regional Municipality. In the decision, the SCC clarified the common law test for claimants to establish de facto expropriation of private property through a public authority’s exercise of regulatory powers.

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The McCarthy Tétrault team continues to closely monitor the evolution of the law of expropriation across Canada. If you would like more information on what these developments may mean for you and your business, please reach out to a member of our Real Estate team.

4) Senate Releases Report Calling on Canadian Government to Fix its Sanctions Regime

Russia’s invasion of Ukraine has triggered the imposition of the most impactful economic sanctions measures in modern history. As recently observed by the US Deputy Attorney General, “What was once a technical area of concern for select businesses should now be at the top of every company’s risk compliance chart... in today’s world, sanctions are the new FCPA [Foreign Corrupt Practice Act].” Sanctions compliance and enforcement risks have quickly risen to the top of management and board concerns in firms across Canada and its western allies.

Earlier this Summer, the Canadian Senate’s Standing Committee on Foreign Affairs and International Trade released a report based on its review of two of Canada’s legislative sanctions tools, the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) and the Special Economic Measures Act. The Senate Foreign Affairs Committee recommends 19 ways to improve the effectiveness of these Acts, including by improving coordination with allies, creating a specialized bureau, and increasing guidance, fairness, and transparency. 

The Report provides an overview of Canada’s legislative regime around sanctions and discusses both international coordination and the objectives of the sanctions regime. It makes six recommendations around transparency, alignment with international partners, and the legislative framework. This includes recommending a formal mechanism for coordinating autonomous sanctions in concert with Canada’s allies. Also recommended by the Senate Foreign Affairs Committee is the provision of more detailed information on the identity of sanctioned individuals and entities, amendment of the Acts to require annual parliamentary reporting from the federal government, and the development and provision to the public and private sectors of specific, comprehensive, and timely written guidance on the interpretation of Canada’s sanctions regime. The use of general permits to exempt certain activities from the application of the sanctions, as is done in the United States and United Kingdom to allow humanitarian assistance and winding-down of transactions with sanctioned parties, is recommended to allow activities that are not contrary to the objectives of the sanctions regimes. 

The Senate Foreign Affairs Committee also addresses issues related to administration, due process, and procedural fairness. The Report recommends the establishment of specific service standards to improve the predictability of Global Affairs Canada’s response timelines, as well as the provision of notice and written explanations to sanctioned individuals. Sunset clauses, as used by the United Nations and the European Union, are recommended to ensure the application of sanctions is not open-ended and to force the Canadian government to make explicit renewal decisions as it deems necessary. In addressing the administration and enforcement of the Acts, the Report discusses the $76 million investment announced by the Canadian government to establish a specialized sanctions bureau within Global Affairs Canada to bring Canada’s sanctions implementation capacity in line with that of its allies. 

The Canadian government has not yet responded to the Report, although they recently departed from the sanctions regimes of Canada’s allies by amending the Acts to include expansive “deemed ownership” rules which have created new compliance challenges for Canadian firms by casting a wide net over the scope of property that is deemed to be owned by sanctioned persons.

John Boscariol, Head of McCarthy Tétrault LLP’s International Trade & Investment Law Group, testified before the Senate during its hearing for the preparation of the Report. In a recent blog post, he and Gajan Sathananthan posit that the government will be most likely to take up the Report’s recommendations calling for increased coordination with allies and the creation of the new sanctions bureau. They highlight the need for interpretive guidance and alignment with Canada’s allies in light of the broad impact of Canada’s rapidly expanding sanctions regime on Canadian companies, humanitarian groups, and NGOs.

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McCarthy Tétrault’s International Trade and Investment Group has advised numerous clients in a variety of industries on how to respond to Bill S-211 and will continue to monitor developments in this space.

This newsletter is designed to provide general information only. This newsletter does not provide legal advice on specific issues. You are encouraged to consult with legal counsel should you require assistance in addressing a particular issue or concern.

Tell us what you think! Do you have feedback for the Timely Topics newsletter or topics you’d like for us to explore? Let us know at [email protected].

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