Use of AI Algorithm Triggers Lawsuit and Countersuit

As artificial intelligence (AI) becomes less of a curiosity and more of an everyday tool, disputes are increasingly arising over its operation and, when things go wrong, the question inevitably arises: whose fault is this and who’s liable? One high-profile example is the ongoing dispute between Hong Kong businessman Samathur Li Kin-kan and London-based Tyndaris Investments, in which Tyndaris is suing its client for $3 million in allegedly unpaid fees. In a countersuit, Mr. Li is claiming $23 million in damages allegedly resulting from Tyndaris’ use of algorithmic trading in managing his portfolio.

Tyndaris Case

The dispute centers around whether Tyndaris misled its client as to the AI’s capabilities, which means that the AI’s performance itself will be adjudicated.

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The Limits of Data Localization Laws: Trade, Investment, and Data

On the 8th and 9th of June, 2019, the G20 Ministerial Meeting on Trade and Digital Economy took place in Tskuba, Japan. In a Ministerial Statement released after the meeting, the Ministers reaffirmed their commitments to transborder data flows noting that it generates higher productivity, greater innovation, and improved sustainable development, while acknowledging certain challenges related to “privacy, data protection, intellectual property rights, and security”.

Indeed, with the increasing importance of data in everything from cloud computing, the internet of things and big data analytics, the free flow of data is essential to unlocking the full potential of global e-commerce and modern business in data driven economy.

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UK Privacy Regulator Publishes Report Critical of AdTech and Real Time Bidding

The rapid development of the online advertising industry and advances in advertising technology have resulted in automated and nearly instantaneous auctions of ad space on websites and other digital environments. This process, known as “Real Time Bidding” (“RTB”), is currently an area of concern for the United Kingdom Information Commissioner’s Office (“ICO”), which recently published an update report (“Update Report”) criticizing the online advertising industry’s handling of data and concluding that standard industry practices are non-compliant with European Union privacy laws.

How Real Time Bidding Works

Sophisticated RTB can be a complex series of processes and interactions, but at its most basic, it refers to a process by which online advertisers compete for an audience.

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Court Finds Language of Privacy Act Precludes Arbitration of Privacy Disputes

Overview

There have been a number of recent decisions in the arbitration space regarding when it is appropriate to stay litigation in favour of arbitration and where it is not. In particular, recent appellate case law (e.g., Wellman, and Heller) discusses and interprets the principle set out in Seidel v. TELUS Communications Inc., 2011 SCC 15 that arbitration clauses will generally be enforced “absent legislative language to the contrary.”

In particular, these cases address whether statutory language in consumer protection and employment legislation constitutes “legislative language to the contrary” that precludes parties from agreeing to arbitrate. However, there was no case law that considered this issue in the context of the various privacy statutes that exist across Canada – until now.

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CSA Publishes Business Plan, Includes Key Crypto-Asset Issues

On June 13, 2019, the Canadian Securities Administrators (“CSA”), a national organization committed to harmonizing securities regulation across Canada,  published the CSA Business Plan 2019-2022 (“Plan”) outlining initiatives to better assist participants in the capital market industry.  Most notably, the Plan identifies as its Strategic Goal #6 “Respond[ing] to technology-related emerging regulatory issues”. This includes the goal of increasing Canadians’ awareness of policy issues pertaining to cryptocurrency in the context of emerging technology.

Emerging technologies often create regulatory challenges because of unknown implications of the technology itself, coupled with the lack of regulatory clarity. Market participants are often affected by shifts in market conditions, investor demographics, technological innovations, and globalization.

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The Privacy Commissioner, Search Engines and the Media – a Battle Over the “Right to be Forgotten”

In 2018, the Office of the Privacy Commissioner of Canada (“OPC”) began a reference to the Federal Court under subsection 18.3(1) of the Federal Courts Act (the “Reference”) in the context of an OPC investigation into a complaint made by an individual against Google. The complainant alleges that Google is contravening the Personal Information Protection and Electronic Documents Act (“PIPEDA”) by continuing to display links to news articles concerning the complainant when his name is searched using Google’s search engine. He requested that Google remove the articles from search results using his name (otherwise known as de-indexing).

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Defendants Awarded Costs Where Bringing Breach Class Action Was “Questionable”

In the costs motion (Kaplan v. Casino Rama, 2019 ONSC 3310) arising from the litigation regarding the Casino Rama breach, Justice Belobaba awarded costs to the defendant, saying there was neither public interest nor a novel issue sufficient to warrant costs being awarded to the plaintiffs. Justice Belobaba was of the view that the very basis for bringing the class action was questionable, a fact which played a role in the plaintiffs having to pay. This decision may have class counsel more closely scrutinizing the merits of bringing data breach class actions.

Background

In an earlier decision released on May 7, 2019, Justice Belobaba dismissed the plaintiffs’ motion for certification, finding that the proposed class action “collapsed in its entirety” at the common issues stage.

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