Canadian Underwriter

Cyber-risk field “is only beginning to open,” lawyer tells PLUS Canada

October 12, 2006   by Canadian Underwriter

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Risk and liability associated with Internet communications is a “vast insurance field that is only beginning to open,” a lawyer told people attending a Professional Liability Underwriting Society (PLUS) Canada education seminar in Toronto.
“As long as the Internet is around, the work will never end” for lawyers or risk managers, Robert J. Howe, a partner at Davies Howe Partners in Toronto, told his audience.
The indeterminate nature of Internet law means risk managers need to focus on risk rather than liability when it comes to assessing so-called “cyber-risks,” Howe suggested.
As an example of the difficulties, he cited the Supreme Court of Canada’s recent decision in the copyright case of Heather Robertson v. The Thomson Corporation (the owner of the Globe and Mail). The court’s split in the case portends how difficult it will be for risk managers to assess corporate risk in an uncertain legal environment surrounding the Internet.
In a 5-4 decision basically what Howe referred to as a “jump ball” the Supreme Court decided “newspaper publishers are not entitled to republish freelance articles acquired for publication in their newspapers in [online databases] without compensating the authors and obtaining their consent.”
Howe noted that the Canadian decision could relate to articles that had been reprinted on newspaper online databases for the past 20 years, representing anywhere up to CD$100 million. “How do you quantify the damages in this award?” he asked, noting that a similar decision in the United States was eventually settled for US$18 million.
The unpredictability of the courts in deciding Robertson and other Internet cases including those determining the responsibility of Internet Service Providers (ISPs) for posting allegedly defamatory materials means risk managers in the future will have to deal with a huge amount of uncertainty on potentially very large exposures, Howe said.

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