Ruling may broaden Ottawa’s reach over patents

Seven pharmaceutical companies, along with a string of intellectual property organizations and patients’ groups acting as interveners, that challenged the constitutionality of new regulations intended to lower patented drug prices were rebuffed after Quebec Superior Court found that the price control of patented drugs falls within the scope of the federal government’s powers over patents.

The long-awaited decision will likely have a substantial impact on the pharmaceutical industry in Canada, will compel Ottawa to overhaul its regulatory approach and guidelines over patented drug pricing, and may even broaden the federal government’s reach to regulate other intellectual property, according to legal experts.

“The judgment sets an important precedent about the scope of the federal Parliament’s powers to legislate regarding patents, and potentially by analogy how the federal government can exercise its powers over other forms of intellectual property,” noted Miriam Clouthier, a Montreal lawyer with IMK LLP who represented the Canadian Cystic Fibrosis Treatment Society, who were interveners in the case.

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New tort for online harassment recognized by court

A new tort of “harassment in internet communications” has been recognized after Ontario Superior Court found that traditional defamation law remedies have been thrown into disarray by the internet.

In a case dealing with extraordinary campaigns of malicious harassment and defamation carried out unchecked, for many years, as unlawful acts of reprisal, Ontario Superior Court Justice David Corbett held that while regulation of speech carries with it the risk of over-regulation, even tyranny, doing nothing also also “carries with it the risk of anarchy and the disintegration of order.”

[4]               Freedom of speech and the law of defamation have developed over centuries to balance the importance of preserving open public discourse, advancing the search for truth (which must allow for unpopular and even incorrect speech), protecting personal reputations, promoting free democratic debate, and enforcing personal responsibility for statements made about others.  The value of freedom of speech, and the need for some limits on that freedom, have long been recognised as central to a vibrant and healthy democracy and, frankly, any decent society.

[5]               The internet has cast that balance into disarray.

[6]               This case illustrates some of the inadequacies in current legal responses to internet defamation and harassment.  This court’s response is a solution tailored for these cases and addresses only the immediate problem of a lone publisher, driven by hatred and profound mental illness, immune from financial constraints and (dis)incentives, apparently ungovernable except through the sledgehammer response of incarceration…

It is clear that the law needs better tools, greater inter-jurisdictional cooperation, and greater regulation of the electronic “marketplace” of “ideas” in a world with near universal access to the means of mass communication.

Here is the ruling.

Federal Court rejects Canadian Patent Office’s approach to computer-implemented inventions

The Federal Court has plainly and forcefully struck down the approach used by the Canadian Intellectual Property Office (CIPO) to patent claims in a decision widely expected by the patent bar to have far-reaching implications, particularly for computer-implemented inventions.

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Time for the Quebec disciplinary council to Zoom out

The Quebec justice system, like elsewhere, is scrambling to put in place measures to make things move along during the Covid-19 outbreak. Sometimes, though, well-intentioned efforts risk doing more harm than good, especially if the recourses are rushed and not necessarily well researched, examined and analyzed.

This appears to be the case with efforts by the Quebec disciplinary council of presidents.

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Competition Bureau clamping down on online misleading advertising

The Competition Bureau is keeping a watchful eye on the digital world.

The Commissioner of Competition, Matthew Boswell, has made it plain that one of his priorities is to investigate and clamp down on false and misleading advertising online, and build trust in the digital economy through enforcement, “a key element of our vision.”

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Suspected PlexCoin founders agree to pay nearly US$7 million

Dominic Lacroix and Sabrina Paradis-Royer lived the good life, while it lasted. He leased a $140,000 luxurious Mercedes Benz and bought a T-Rex, a three-wheeled sports car manufactured by a now bankrupt Canadian company. He purchased a $2.52 million home in a chic neighborhood in Quebec City, and then poured nearly half a million dollars in renovations. And he amassed a healthy fortune, hovering around US$3.3 million, not counting 1,677 bitcoins and other virtual currencies, in the span of a couple of months.

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Troll sentenced to prison for inciting hate online following Quebec City mosque massacre

A troubled young Quebec City man who incited hate against Arabs by writing unapologetically “cruel and racist” rantings on social media hours after six people were shot dead and five wounded at a mosque in Quebec City in 2017 was sentenced to 60 days in prison.

The 20-year old arborist, who pled guilty, blamed his drug-induced intoxicated state for his online racist comments. He testified that he consumed cocaine, ketamine and MDMA at a rave. He also admitted during trial that he was “a bit racist” but was willing to make a public apology and make a donation in exchange for an absolute discharge.

Court of Quebec Judge Mario Tremblay would have none of it. The comments were heinous, issued at a time when victims, the Arab community and society were coping with grief, and were made repeatedly, held Judge Tremblay.

“Considering the context in which the comments were made and its contents, the sentence must be sufficiently severe to have a denunciation effect,” said Judge Tremblay in R. c. Huot 2018 QCCQ 4650. “The accused has no excuse. He made these comments repeatedly” during three days.

But Judge Tremblay made it plain that the accused was not sentenced because he still holds racist thoughts. Rather his deeply held personal views “wipe out the possibility” that his excuses are sincere and he failed to demonstrate a genuine awareness and recognition of the harm done to Arab community and society at large, added Judge Tremblay.

Echoing remarks made more than a decade ago in R. c. Presseault, 2007 QCCQ 384 by then Court of Quebec Judge Martin Vauclair, now a Quebec Court of Appeal Justice, Judge Tremblay lamented that he could not impose a stiffer sentence because of “choices made by the legislator.” The maximum sentence for inciting hate is two years imprisonment.

“The consequences associated with such remarks are latent, pernicious and could have an explosive impact on a fragile person susceptible of committing an illegal act,” concluded Judge Tremblay.

The arborist, the third person to be charged for inciting hate crimes following the Quebec City mosque shooting, will serve his sentence intermittently, on weekends.

Quebec’s plans to block unlicensed gaming sites ruled unconstitutional

The Quebec government took a gamble, and lost.

Under the guise of concern for the health and safety of Quebecers, the provincial government introduced controversial legislation that compelled Internet service providers to block unlicensed gambling websites.

It was a ruse, a move to protect their turf and increase revenues.

So concluded Quebec Superior Court Justice Pierre Nollet who held that Quebec’s effort was unconstitutional because it infringes upon federal jurisdiction on telecommunications and criminal law matters.

The contentious legislation was closely watched by other provinces who have online gaming offerings. Much is at stake. H2 Gambling Capital, a leading supplier of gambling data and market intelligence, predicted that the value of the global online casino and bingo market would surge to approximately US$13.5 billion by 2018, representing a compound annual growth rate of more than 10 per cent from 2014.

Or as renown Montreal gaming lawyer Morden Lazarus told me: “The provinces have decided that they want to get into online gaming and they want to be able to generate these revenues for their own benefit. The Quebec government is leading the charge.”

The decision may have wider implications, according to Michael Geist, a law professor at the University of Ottawa and Canada Research Chair in Internet and E-commerce Law. A coalition of companies including broadcasters like the CBC, telecoms (including Bell Canada) and creative groups have asked the federal regulator Canadian Radio-television and Telecommunications Commission (CRTC) to create an agency that blocks websites with illegal content.

But Judge Nollet noted that the 1993 Telecommunications Act enshrines the concept of net neutrality, and requires the CRTC to block sites only under strict circumstances.

“In the Court’s opinion, section 36 (of the Act) does not permit telecommunications companies to modify signals, whether legal or not, except in certain cases provided for in the regulatory policy such as the power to modify the signal to eliminate network threats,” said Judge Nollet in Association canadienne des télécommunications sans fil c. Procureure générale du Québec, 2018 QCCS 3159.

The link to network threats is important, said Geist in a blog posting, because “supporters of the Bell site blocking plan (who argue that it does not implicate the net neutrality rules) cite a 2009 CRTC net neutrality decision reference to illicit materials, which they claim could include copyright infringing materials.

“I argue that the reference ‘clearly refers to network threats, not the content of the materials.’ The court in this case agrees with the need for a link to network threats. The illegality of content – whether copyright infringement or online gambling – does not go directly to the security and integrity of the network.”

U.S. SEC obtains another order to freeze assets of alleged PlexCorps founder

The noose is tightening around Dominic Lacroix, a Quebec City businessman believed by Quebec’s financial watchdog and the U.S. Securities and Exchange Commission to be behind PlexCorps, a controversial cryptocurrency start-up accused of fraudulently selling millions of dollars’ worth of digital assets.

Nearly a month after Lacroix was ordered by the Quebec Financial Markets Administrative Tribunal to hand all bitcoins in his possession, the SEC obtained on June 15, 2018 a second emergency court order freezing his assets.

On December 2017, the SEC had filed securities charges, and obtained an emergency asset freeze, against Lacroix, described as a “recidivist” Quebec securities law violator, his partner Sabrina Paradis-Royer and PlexCorps.

The SEC returned to the federal court in Brooklyn, New York this month because Lacroix allegedly has been using secret accounts, including an account in his brother’s name but which he controlled, to “improperly dissipate” for personal use monies he obtained from investors during the PlexCoin Initial Coin Offering. U.S. District Judge Allyne Ross granted the emergency freeze asset after finding there was a grave risk that Lacroix would siphon monies he obtained from PlexCoin investors.

The SEC original complaint alleges that from August 2017 to December 1, 2017, PlexCorps, Lacroix and Paradis-Royer “purportedly” obtained $15 million from thousands of investors through “materially false and misleading statements” made by Lacroix and through entities Lacroix controls. The complaint  alleges that he promised investors returns of 1,354% in under 29 days. The complaint further alleges that Lacroix and Paradis misappropriated investor funds and engaged in deceptive acts relating to PlexCoin.

On May 24, 2018, the Quebec Financial Markets Administrative Tribunal issued new freeze orders against Lacroix and Paradis-Royer — on top of the ones they already face — in a bid to protect the public and prevent them from transferring or “squandering” monies in their possession.

Lacroix was found guilty last October of contempt of court for failing to adhere to broad ex parte orders issued by the Tribunal on July 2017 that forbade him and his company DL Innov Inc. from trading in any form of investment. On December 2017, he was sentenced to a two-month jail term and fined $10,000 for contempt of court while DL Innov was fined $100,000. Both rulings have been appealed.

In 2013, Lacroix pleaded guilty to six counts of “illegal placement, illegal practice, and transmission of false or misleading information” and was fined $25,000.

Suspected PlexCoin founder sentenced to two months in prison

Dominic Lacroix, a Quebec City businessman believed by Quebec’s financial watchdog and the U.S. Securities and Exchange Commission to be behind PlexCorps, a controversial cryptocurrency start-up accused of fraudulently selling up to $15 million of tokens, was sentenced to two-month jail term and fined $10,000 for contempt of court.

“The defendants fully understood the orders but intentionally and voluntarily disrgarded them,” said Quebec Superior Court Justice Marc Lesage in a 15-page ruling dated December 8th. “The Court finds that this is a case of exteme case of contempt and bad faith by the defendants.”

Lacroix and his company DL Innov inc. were found guilty in mid-October by Justice Lesage of failing to respect broad ex parte orders issued by the Quebec Financial Markets Administrative Tribunal on July 20th that forbade them from “engaging in activities for the purpose of directly or indirectly trading in any form of investment” covered by section 1 of the Quebec Securities Act, either in Quebec or from Quebec to outside of the province. DL Innov inc. was fined $100,000 for the same offense. Both Lacroix and DL Innov have three months to pay the fine.

Search warrants conducted by the Quebec’s financial regulator, the Autorité des marchés financiers (AMF), at Lacroix’s home and the offices of DL Innov inc. uncovered exchanges Lacroix had with one of DL Innov’s employees between July 25th and July 28, 2017. According to Justice Lesage, it revealed the “cavalier” attitude they had towards the court orders and “their intention not to follow them.” Among other things, they said:

  • “These are administrative procedures ordered by a juge. We don’t care about the AMF.”
  • “Our target audience is…those who don’t understand crypto.”
  • “We received another summons by the AMF. They won’t give up, there must be no traces.”

On December 1, the U.S. Securities and Exchange Commission filed charges against Lacroix, a “recidivist” Quebec securities law violator, his partner Sabrina Paradis-Royer and his company PlexCorps. The SEC’s complaint charges Lacroix, Paradis-Royer and PlexCorps with violating anti-fraud provisions, and Lacroix and PlexCorps with violating the registration provision, of U.S. federal securities laws. The complaint seeks permanent injunctions, disgorgement plus interest and penalties.

The SEC also obtained an emergency asset freeze against PlexCoin, a controversial “fast-moving” and “purported” initial coin offering (ICO) that has raised up to $15 million from thousands of investors since August 2017.

U.S. SEC files charges against PlexCorps

The U.S. Securities and Exchange Commission has obtained an emergency asset freeze against PlexCoin, a controversial “fast-moving” and “purported” initial coin offering (ICO) that has raised up to $15 million from thousands of investors since August 2017.

The SEC also filed charges against Dominic Lacroix, a “recidivist” Quebec securities law violator, his partner Sabrina Paradis-Royer and his company PlexCorps, according to a new filing dated December 1, 2017 in Brooklyn, New York.

The SEC’s complaint charges Lacroix, Paradis-Royer and PlexCorps with violating anti-fraud provisions, and Lacroix and PlexCorps with violating the registration provision, of U.S. federal securities laws. The complaint seeks permanent injunctions, disgorgement plus interest and penalties. The SEC is also seeking an officer-and-director bar for Lacroix as well as a bar from offering digital securities against Lacroix and his partner Paradis-Royer.

Initial coin offerings have become a bonanza for digital currency entrepreneurs in spite of increased attention from regulators. So far, ICOs have raised US$3 billion in 2017 thanks to more than 200 offerings held during the course of the year, according to data obtained from CoinSchedule.

Regulators around the world are becoming increasingly concerned about the dangers posed by ICOs and are warning about the risks of asset bubbles, market manipulation and fraud. Indeed, the SEC established last September a cyber unit to keep an eye on ICOs, distributed ledger technology, the spread of false information through electronic and social media, and hacking and threats to trading platforms.

PlexCoin caught the attention of Quebec’s financial watchdog this summer which unsuccessfully tried to stop its ICO. The SEC’s complaint does not mince words.

“This is an emergency action to stop Lacroix, a recidivist securities law violator in Canada, and his partner Paradis-Royer, from further misappropriating investor funds illegally raised through the fraudulent and unregistered offer and sale of securities called ‘PlexCoin’ or ‘PlexCoin Tokens’ in a purported Initial Coin Offering,” affirms the 35-page SEC complaint.

The SEC complaint alleges that from August 2017 to December 1, 2017, PlexCorps, Lacroix and Paradis-Royer “purportedly” obtained $15 million from thousands of investors through “materially false and misleading statements” made by Lacroix and through entities Lacroix controls such as promising investors returns of 1,354% in under 29 days. The statement further alleges that Lacroix and Paradis misappropriated investor funds and engaged in deceptive acts relating to PlexCoin.

The false and misleading statements, according to the SEC’s statement, include:

  • Lacroix and PlexCorps asserted that their team consisted of a growing cadre of experts stationed around the world, and that the principal place of business was in Singapore.

In fact, the SEC asserts that “Lacroix knew or recklessly disregarded, PlexCorps and PlexCoin are a scam” because there is no PlexCorps team other than a handful of Lacroix’s employees in Quebec.

  • According to Lacroix, the identity of PlexCorps’ executives were kept hidden to avoid poaching by competitors.

In fact, the SEC states that the reason why PlexCorps did not disclose the identity of its principal executive was because Lacroix was a known recidivist securities law violator in Canada.

  • Lacroix said that the proceeds of the PlexCoin ICO would be used to develop other PlexCorps products.

The SEC alleges that the proceeds from the PlexCoin ICO were intended to fund Lacroix and Paradis-Royer’s expenses including home décor projects.

The funds fraudulently raised during the PlexCoin ICO have been channeled through various fiat currency accounts belonging to Lacroix and Paradis-Royer and through cryptocurrency addresses under their control on various blockchains, according to the SEC statement.

Of the 81 million PlexCoins purchased, approximately $810,000 is currently held in three accounts to which Lacroix and his associates will soon gain access, alleges the SEC. The SEC also alleges that Lacroix and Paradis-Royer have misappropriated or attempted to misappropriate at least $200,000 of these amounts on “extravagant” personal expenditures.

“PlexCoin is and was a fraud aimed at enriching” Lacroix and Paradis-Royer, plainly states the SEC in its statement.

PlexCorps disputes the charges. “We are being depicted as robbers, scammers and fraudsters everywhere in the media. They are smearing our name with some allegations that can sometimes be false or misleading,” it said in a Facebook posting dated December 4th.

PlexCorps also states that it will be cooperating with Quebec’s securities regulator, the Autorité des marchés financiers, and the SEC “until the end of the investigation.”

Lacroix’s legal hurdles are from over. Earlier this fall, he was found guilty of contempt of court. He is now awaiting his sentence.