Richard C. Owens
November 20, 2001
A proposed law, Bill C-31, would prevent any references to the Export Development Corporation on pain of jail or a hefty fine. It needlessly curtails free speech.
Our lawmakers are considering new legislation to govern the Export Development Corporation, a Crown corporation that finances about 10% of Canada’s exports. Among other things, Bill C-31 states:
24. 2(1) Except with the written consent of the Corporation, no person shall, in any prospectus or advertisement, or for any other business purpose, use the following names and initials: “Export Development Canada”, “Exportation et développement Canada”, “Export Development Corporation”, “Société pour l’expansion des exportation”, “E.D.C.”, “EDC”, “S.E.E.” and “SEE”.
This section — which carries a fine of $10,000 and up to six months in jail — threatens free speech and exemplifies poor lawmaking. In a Crown corporation, it erodes the underpinnings of democratic discourse.
If Bill C-31 passes in this form – and because it has passed the House of Commons, only the Senate can rescue it now — no one will be able to refer to the Export Development Corporation by its name or even its initials for any business purpose without EDC’s consent.
Many businesses carrying out everyday activities could be hamstrung. In their public securities offerings, businesses that make material use of EDC financing would be obligated to say so in their prospectuses. If EDC were slow to grant consent or withheld it altogether, the issuer of the prospectus would be forced to decide which law it preferred to break. In any event, the federal statute has no business regulating securities law, a provincial responsibility.
But apart from problems such as this, which the law’s drafters may have anticipated, the law would also have entirely unintended business consequences. The clause would trip up businesses that have no dealings with EDC, and are involved in activities that could not possibly be confused with any EDC activity (confusion is the usual legal benchmark for restricting access to a trademark). The initials edc might aptly describe other products or inventions, for example, or they might refer to someone’s initials.
The law also extends its reach beyond business matters by criminalizing references to EDC in any advertisement, which would include a bumper sticker, a decal or an advocacy ad critical of this government-owned corporation.
What legitimate business harm is EDC sparing itself by taking shelter under this clause? Try as I might to see the useful side of this provision, such harm remains inscrutable. It is hard to imagine what sorts of improper uses of the EDC name or trademarks could occur which are not already controlled by existing laws on fraud, passing off, competition or trademarks. Every other Canadian business, including private sector financiers, contents itself with these protections.
A clause that criminalizes speaking EDC’s name is dangerous overkill. Trademark law relies on private remedies. If a trademark holder’s rights are transgressed, remedies lie in court, following proof of harm. Such remedies are evidently too cumbersome for this Crown corporation. Bill C-31 will let EDC call police to have a troublemaker arrested, even if EDC has suffered no harm. There are few requirements to be proved — use the letters edc in an advertisement and you can be arrested and charged. This law would relieve EDC of the inconvenience of responsibly policing its rights, like other Canadians are obliged to. This amounts to one law for Crown corporations, one for private ones — for the same harm.
Because I am in the law business, this article would become a prosecutable offence, since my imagination is beggared by the prospect of writing about the Export Development Corporation without naming it. Someone in the media business — including a reporter on the EDC beat — would also be subject to a $10,000 fine and jail. Will we develop orthographical conventions like “the entity commonly known as *xport *evelopment *orp”? It is a good thing that I am writing before the law comes into effect.
Lest these concerns seem academic, the reader should note that EDC reacts to public criticism. Probe International, a respected non-profit organization dealing with Third World trade and foreign aid issues, has for 20 years been very critical of EDC. In disseminating its policy writings, Probe put EDC’s name and logo on their Web site. Needless to say, Probe International was not using EDC’s name or logo for a commercial purpose, but only to draw attention to criticisms of Canadian government policies in supporting EDC.
The predicable result: Probe International received a letter from EDC’s legal counsel, requiring that it cease and desist from the use of EDC’s trademarks, including the name Export Development Corporation and EDC, alleging trademark and copyright infringement.
Probe International used the EDC name and other trademarks in commenting on EDC and its business, not to trade on them, not to confuse the marketplace. Under existing trademark law, EDC probably had no right of action at all. But forceful threats can be as chilling as valid threats, especially for underfunded non-profit organizations. Ought our government representatives to enact overly broad trademark laws that curtail debate about government policy?
The content of EDC’s lawyer’s letter is important — it purports to deny Probe International the right to refer to EDC by its name or initials. Until now, only God, and a rock star (Prince) claimed the privilege of denying access to their names.
EDC and other Crown corporations like it, are not like other corporations. They do not respond to markets and shareholders, at least not in the normally understood business sense, and they are not subject to the elaborate models of disclosure and governance that serve society so well in the private sector. EDC plays by unique rules and the decisions of the government of the day. If we are to permit Crown corporations to have roles in our society and economy, their only check is the oversight of concerned citizenry, including non-profits. A government that shackles them by passing chilling laws and by unleashing chilling lawyers threatens democratic accountability. If, prior to the passage of the new law, EDC would stretch intellectual property laws in response to debate from Probe International, what might it do after it obtains those powers?
Then, too, why should EDC alone benefit from such a law? Would we accept a law prohibiting use of Microsoft’s name? Imperial Tobacco? An EDC competitor in the private sector? Indeed, current law permits use of names and trademarks in comparative advertising, regardless of embarrassment to the trademark holder, because the consumer’s right to know trumps a corporation’s right to squelch comment about its products.
Even if, as some might think, EDC would never be so foolhardy as to apply this law to limit the speech of the press or of its opponents, it still does not justify sloppy law-making. If overly broad laws can be passed on the expectation they will only be used in the most benign climate of interpretation, we delude ourselves and allow one of the basic principles of the rule of law to be undermined: We are absolutely entitled to clear — and compelling — rules about when the state can deprive us of our liberty or our property.
Richard C. Owens is the executive director of the Centre for Innovation Law and Policy at the University of Toronto Faculty of Law.