Earth Future Lottery case has potential to lay down rules for Internet jurisdiction

Industry observers are divided on the role a future decision in the little-known Earth Future Lottery case, to be argued before the Supreme Court of Canada March 11, will have on a potential leave to appeal the Tariff 22 decision. The Earth Future case appears to deal extensively with Internet jurisdictional issues, one of the sharpest arrows in the ISPs’ quiver in asking to have certain aspects of the Federal Court of Appeal’s Tariff 22 decision reversed (CNM, Oct. 30/02; Aug. 21/02). Though the weight of opinion holds that the cases are dissimilar, there appears to be a slim possibility that the court could lay down new principles in dealing with Internet jurisdiction, which would render an appeal on that basis by ISPs unnecessary. The Prince Edward Island-based Earth Future Lottery has proposed setting up, on a non-profit basis, a lottery for which tickets could be bought online with the proceeds going to various environmental initiatives. Last year, however, in response to questions raised by the P.E.I. government, the Appeal Division of the Supreme Court of Prince Edward Island stated the opinion that advertising a provincially-based lottery and selling tickets to people outside the province via the web would contravene the Criminal Code. Because tickets would be purchased online, the lottery would constitute a game operated on a computer and thus run afoul of the Criminal Code. The court declined, however, to rule on whether "inviting a prospective purchaser outside of Prince Edward Island to offer to purchase a ticket by means of an Internet server located in Prince Edward Island, and accepting that offer to purchase the ticket in Prince Edward Island by means of that Internet server, constitute selling that lottery ticket (i) in the jurisdiction in which that prospective purchaser resides, or (ii) in Prince Edward Island and…is a ticket offered for sale and purchased under circumstances described above ‘sold’ (i) in the jurisdiction in which that prospective purchaser resides, or (ii) in Prince Edward Island?" In an appeal referred as of right to the Supreme Court – meaning no leave to appeal had to be filed – the lottery has asked the court to explicitly rule that the lottery would be "conducted, managed and operated exclusively in the Province of Prince Edward Island…" It also wants a determination that, "The Earth Future Lottery is not a game, proposal, scheme, plan, means, device, contrivance, or operation that is operated on or through a computer, video device or slot machine…" The lottery writes in a brief: "The jurisprudence has thus far not established a definitive test for determining where web site activity takes place. There is, however, a substantial body of jurisprudence that supports the view that one important factor in assessing where web site activity takes place is the location of the server. This position is based on a realistic view of how the Internet works, appropriately addresses the many jurisdictional problems created by the Internet (e.g. the potential that web site content providers will be subject to multiple and conflicting content requirements, regulatory regimes, and multi-jurisdictional civil actions and criminal prosecutions), and provides a predictable and easily applied test for deciding Internet related jurisdictional issues." The point is a crucial one for the lottery, since if any aspect of its operation were deemed to take place outside the Island, it would render the initiative illegal. The point, for Earth Future, may be moot. An earlier Federal Court of Canada tax ruling (2002 FCA 498) on December 16 would see the lottery denied a provincial licence on the basis of its ineligibility for status as a charitable foundation. The Attorney General of Canada and a group of lottery companies including the Interprovincial Lottery Corp., the Ontario Lottery and Gaming Corp., Loto-Québec, the Western Canada Lottery Corp. and the British Columbia Lottery Corp. have filed briefs with the court to oppose the P.E.I. lottery’s argument that since all the servers associated with the initiative would be in P.E.I., the lottery would be solely conducted in the province, and thus be legal. In its brief, the office of the Attorney General of Canada writes: "The Appellants rest much of their argument justifying the impugned scheme on the fact that the communications take place over the Internet and the Lottery sending server is in P.E.I. This argument misperceives the nature of Internet technology. While the operating sending server may be in P.E.I., Internet communication depends on utilizing a host of servers…around the world. Ultimately, the buyer’s server must also be used to complete the communication. Thus the operator’s server requires other servers to operate. Many of these servers may be out of jurisdiction." No matter what fate befalls Earth Future, the potential exists for Canada’s highest court to begin creating law related to Internet jurisdiction. That, say some observers, could have the potential to shape the Tariff 22 application for leave to appeal filed last April by the Canadian Association of Internet Providers, Bell Canada and the Canadian Cable Television Association (CNM Special Update, Aug. 1/02). A key component of that appeal request is to overturn an earlier Federal Court of Appeal decision that music originating from outside Canada, but received by a Canadian user, should be subject to copyright tariffs. In its request for leave, the applicants in the Tariff 22 case write: "Leave should be granted not only to resolve the uncertainty inherent in the real and substantial connection test, but also because of the uncertainty engendered by conflicting decisions concerning the extra-territorial application of domestic law to Internet communications around the world. The Court of Appeal’s conclusion that an Internet communication occurs ‘in Canada’ solely by virtue of it being received in Canada is fundamentally flawed." If the Supreme Court decides that the only issue of national importance in the Tariff 22 case deals with jurisdictional issues – the unrelated caching issue being viewed by some as a lesser argument on which to base an appeal – it has been suggested that the court may decide it need not build further on the related jurisprudence it establishes in the Earth Future case. Other observers note, though, that a ruling in the lottery case may have little bearing on a copyright case. Most experts contacted by Canadian NEW MEDIA warn that the court’s decision in the Earth Future Lottery case is likely to be interpreted narrowly.

Earth Future Lottery case has potential to lay down rules for Internet jurisdiction

News | 01/23/2003 5:00 am EST

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