The Direct Recourse of a Subrogated Insurer

September 1, 2005

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Anne Bélanger
Partner, Lawyer

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March 27, 2025

Businesses: Four tips to avoid dependency or vulnerability in your use of AI

While the world is focused on how the tariff war is affecting various products, it may be overlooking the risks the war is posing to information technology. Yet, many businesses rely on artificial intelligence to provide their services, and many of these technologies are powered by large language models, such as the widely-used ChatGPT. It is relevant to ask whether businesses should rely on purely US-based technology service providers. There is talk of using Chinese alternatives, such as DeepSeek, but their use raises questions about data security and the associated control over information. Back in 2023, Professor Teresa Scassa wrote that, when it comes to artificial intelligence, sovereignty can take on many forms, such as state sovereignty, community sovereignty over data and individual sovereignty.1 Others have even suggested that AI will force the recalibration of international interests.2 In our current context, how can businesses protect themselves from the volatility caused by the actions of foreign governments? We believe that it’s precisely by exercising a certain degree of sovereignty over their own affairs that businesses can guard against such volatility. A few tips: Understand Intellectual property issues: Large language models underlying the majority of artificial intelligence technologies are sometimes offered under open-source licenses, but certain technologies are distributed under restrictive commercial licenses. It is important to understand the limits imposed by the licenses under which these technologies are offered. Some language model owners reserve the right to alter or restrict the technology’s functionality without notice. Conversely, permissive open-source licenses allow a language model to be used without time restrictions. From a strategic standpoint, businesses should keep intellectual property rights over their data compilations that can be integrated into artificial intelligence solutions. Consider other options: Whenever technology is used to process personal information, a privacy impact assessment is required by law before such technology is acquired, developed or redesigned.[3] Even if a privacy impact assessment is not legally required, it is prudent to assess the risks associated with technological choices. If you are dealing with a technology that your service provider integrates, check whether there are alternatives. Would you be able to quickly migrate to one of these if you faced issues? If you are dealing with custom solution, check whether it is limited to a single large language model. Adopt a modular approach: When a business chooses an external service provider to provide a large language model, it is often because the provider offers a solution that is integrated to other applications that the business already uses, or because it provides an application programming interface developed specifically for the business. In making such a choice, you should determine whether the service provider can replace the language model or application if problems were to arise. If the technology in question is a fully integrated solution from a service provider, find out whether the provider offers sufficient guarantees that it could replace a language model if it were no longer available. If it is a custom solution, find out whether the service provider can, right from the design stage, provide for the possibility of replacing one language model with another. Make a proportionate choice: Not all applications require the most powerful language models. If your technological objective is middle-of-the-road, you can consider more possibilities, including solutions hosted on local servers that use open-source language models. As a bonus, if you choose a language model proportionate to your needs, you are helping to reduce the environmental footprint of these technologies in terms of energy consumption. These tips each require different steps to be put into practice. Remember to take legal considerations, in addition to technological constraints, into account. Licenses, intellectual property, privacy impact assessments and limited liability clauses imposed by certain service providers are all aspects that need to be considered before making any changes. This isn’t just about being prudent—it’s about taking advantage of the opportunity our businesses have to show they are technologically innovative and exercise greater control over their futures. Scassa, T. 2023. “Sovereignty and the governance of artificial intelligence.” 71 UCLA L. Rev. Disc. 214. Xu, W., Wang, S., & Zuo, X. 2025. “Whose victory? A perspective on shifts in US-China cross-border data flow rules in the AI era.” The Pacific Review, 1–27. See in particular the Act respecting the protection of personal information in the private sector, CQLR c. P-39.1, s. 3.3.

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March 26, 2025

2025-2026 Quebec Budget: A review of Quebec mining taxation - Challenges to be met, opportunities to be seized

On March 25 last, the Quebec Minister of Finance unveiled his 2025-2026 budget, which significantly transforms the tax landscape of the mining sector in Quebec. This budget introduces major changes to the flow-through share regime and to the tax credit relating to resources, which will have significant implications for investors and businesses in the natural resources sector. Changes to the flow-through share regime Abolition of both 10% additional deductions As part of the review of its tax expenditures, the government has decided to adjust the flow-through share regime. As a result, the following deductions have been abolished: the additional 10% deduction for certain exploration expenses incurred in Quebec by a mining corporation that does not exploit any mineral resources; the additional 10% deduction for certain surface mining exploration expenses incurred in Quebec by a mining corporation that does not exploit any mineral resources. With some exceptions1, these changes will apply to flow-through shares issued after March 25, 2025. It should also be noted that the budget abolishes the additional capital gains exemption resulting from the divestiture of certain resource-related properties, such as flow-through shares. On the other hand, the additional deduction for certain issuance costs seems to be maintained. Changes to the tax credit relating to resources Despite these abolitions, the budget does include some positive news for the critical and strategic metals sector. The budget provides for a temporary increase in the rates of the tax credit relating to resources for eligible expenses related to critical and strategic minerals. Until December 31, 2029, a 45% tax credit rate will apply to these costs for eligible corporations, that is, those that do not exploit any mineral resources, and 20% for other eligible corporations, that is, those that exploit mineral resources. For the purposes of the tax credit relating to resources, critical minerals will refer to the following minerals: antimony, bismuth, cadmium, cesium, copper, tin, gallium, indium, tellurium and zinc. Strategic minerals are defined as cobalt, rare earth elements, platinum group elements, graphite (natural), lithium, magnesium, nickel, niobium, scandium, tantalum, titanium and vanadium. Several other technical changes have also been made to the tax credit relating to resources. These will be the subject of a more detailed bulletin at a later date. The changes introduced by the 2025-2026 Quebec budget will certainly have an impact on the tax planning of enterprises and investors in the natural resources sector. Our team of mining law and tax professionals is ready to answer all your questions regarding these new measures. We can assist you in developing your mining investment projects in Quebec, maximizing the benefits of the enhanced rates of the tax credit relating to resources, as well as in implementing successful flow-through financing. These amendments will not apply to shares issued after March 25, 2025, but before January 1, 2026, provided that they are issued following an application for a preliminary prospectus receipt made no later than March 25, 2025. Nor will they apply to shares issued after March 25, 2025, if issued following a public announcement made no later than March 25, 2025, and if the report of distribution form is submitted to the Autorité des marchés financiers no later than May 31, 2025.

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March 25, 2025

Breaking China’s Grip: U.S. and Canada’s Next Steps in Mining

In a strategic move to bolster domestic production of critical minerals, President Donald Trump has invoked the Defense Production Act (DPA). He signed an executive order aiming to reduce U.S. dependence on foreign sources, particularly China, which dominates the global rare earth minerals market. This market dominance poses economic and security risks for countries reliant on these materials for advanced technologies, such as the U.S. and Canada. The executive order leverages the DPA to provide financing, loans, and investment support for domestic processing of rare earth elements (REEs) and critical rare earth elements (CREEs). REEs are profoundly valuable and are essential in the manufacture of electronics (e.g., microchips, semiconductors, and essentially any product with a computer chip). This initiative seeks to enhance national security by ensuring a stable supply of materials essential for technologies ranging from batteries to defense systems. Standard NdFeB magnets, without terbium (Tb) or dysprosium (Dy), cannot be used in high-temperature applications such as in electric vehicles (EV) critical components. The production of high-value pre-magnetic REE alloys, requires the purchase of separated Tb and Dy oxides from China. Recent concerns about future supplies of REEs have now narrowed chiefly to the heavy rare earth elements (HREEs). Essentially, all of the world's HREEs are currently sourced from the south China ion-adsorption clay deposits. The ability of those deposits to maintain and increase production is uncertain, particularly in light of environmental degradation associated with some mining and extraction operations in the region. As the U.S. intensifies efforts to secure its mineral supply chains, Canada, rich in mineral resources, has an opportunity to strengthen its position as a key supplier. However, Canada must also navigate its own strategic interests, ensuring that domestic extraction and processing capabilities remain competitive. REE mineral deposits typically contain appreciable levels of radioactive elements such as thorium (Th) and uranium (U), making the extraction of REE values environmentally challenging. Novel processes for the extraction and separation of REE values in high yield and purity, with an environmentally cleaner design and overcoming the technical and economic limitations of the existing commercial processes, are of commercial interest. Additionally, diversifying export markets beyond the U.S. could shield Canada from potential shifts in American policy while strengthening its role as a global player in the critical minerals industry. As the Trump administration’s directive underscores the strategic importance of CREEs and the necessity to develop resilient supply chains, we can expect more news in the upcoming months from the U.S. regarding its efforts to lessen its dependence on other countries in the mining industry. Stay tuned!

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March 24, 2025

Important changes in trademark law in Canada

Amendments to the Trademarks Act (“Act”) and the Trademarks Regulations (“Regulations”) will come into force on April 1, 2025. These amendments are aimed at preventing abusive practices, improving efficiency in trademark proceedings and clarifying certain practices. The main amendments are as follows: Cost awards The Registrar will have the power to award costs in trademark opposition proceedings, geographical indication opposition proceedings and summary expungement proceedings under section 45 of the Act. Costs will not be awarded to compensate the successful party. This power is discretionary. That being said, costs will only be awarded at the request of a party; the amount of the prescribed fees is not discretionary; and costs will only be awarded in the following four (4) cases: Late cancellation of a hearing, that is, less than 14 days before the hearing date; Unreasonable behaviour resulting in undue delays or expenses. Various factors will be taken into account, including the general context, the duration and cause of the delay, the general behaviour of the other party and the extent of the expenses incurred by the other party. Certain behaviours may be deemed unreasonable, such as failing to attend a hearing or cross-examination without notifying the other party, pursuing a ground of opposition that has no chance of success, making disrespectful remarks or gestures, breaching a confidentiality order, as well as a series of acts that collectively amount to unreasonable behaviour; Decision upholding the refusal of an application for the registration of a trademark on the grounds of bad faith; Filing of a divisional application on or after the day that the original application is advertised (unless only one divisional application is submitted). The Registrar will issue the order as part of the decision rendered on the merits of the case, where applicable. Costs may be substantial, depending on the reason for which they are awarded. They could be as much as ten (10) times the fee set out for filing a statement of opposition. Confidentiality order While the principle of open courts proceedings is the rule that governs the Registrar, it is acknowledged that in some cases, specific interests must be protected. Consequently, a party that considers that there is a risk in disclosing certain facts or documents may request a confidentiality order and must, in such a case, demonstrate that redacting or describing certain information in more generalized manner would not be sufficient. Such orders are not intended to allow the adverse party to restrict access to certain information or documents, but rather to restrict the public’s access to them. A confidentiality order remains an exceptional measure and must therefore be requested sparingly and before the party requesting the order submits evidence. If the evidence has already been submitted, the Registrar will not issue the order. This also means that the evidence should not be submitted at the same time as the request for an order is made. The Registrar will be guided, among other things, by the principles set out in Sherman Estate v. Donovan, 2021 SCC 25, to determine the merits of the request for a confidentiality order. Public access must pose a serious risk to a significant public interest that would otherwise be threatened. An order will only be issued if it is necessary to prevent such risk and if no other reasonable alternative exists. In addition, the benefits of granting the order must outweigh its negative effects. This Supreme Court decision also teaches us that direct evidence is not necessarily required to demonstrate a serious threat to a significant public interest, as the existence of harm can be established on the basis of logical inferences. This process does not affect the timeline of the case, but it is possible to request an extension of time either before or at the same time as the request for confidentiality. In the absence of the other party’s consent, the Registrar will issue a letter requesting such other party’s representations. Should they fail to respond, the Registrar will render a decision. All of these exchanges will be made public, so evidence should not be included in them. Th confidentiality order may be cancelled or amended. In the event of non-compliance with the order, the injured party will have to appeal to the Federal Court. Where the Registrar’s decision containing such an order is appealed, it is imperative that the person for whom the order was issued apply to the Federal Court for a confidentiality order. Case management While the Registrar already issues case management decisions for efficiency and cost-effectiveness purposes, the amendments to the Regulations codify the Registrar’s authority to deal with matters as the circumstances and considerations of fairness permit, in order to assist in moving forward complex cases relating to trademark and geographical indication opposition proceedings and summary expungement proceedings under section 45 of the Act. These “case-managed procedures,” allow the Registrar to set or change the time frame or manner in which a step must be completed, to schedule the steps, to deal with confidential aspects of files, to consolidate related cases and hold conference calls, and more. The Registrar must consider the circumstances of the case, including: the level of intervention likely required by the procedure to ensure that the matters are addressed efficiently and effectively; the nature and extent of evidence; the complexity of the proceeding; whether the parties are represented; the number of related cases; and whether substantial delay has occurred or is anticipated to occur in the conduct of the proceeding. Official marks Official marks are a type of mark with a very broad scope of protection in Canada. Once such a mark has been published, no person may, without the consent of the official mark owner, use or register an identical mark or a mark so nearly resembling as to be likely mistaken for that official mark for any goods or services. Moreover, official marks are not subject to renewal, so they can exist indefinitely. To avoid unduly blocking new applications, a new mechanism is provided whereby the Registrar, on their own initiative or upon request, can deactivate official marks where the mark owner is no longer a public authority or has ceased to exist. Such requests are subject to fees. Withdrawal of an opposition The Registrar is given greater latitude where, in their opinion, an opponent fails to pursue the trademark opposition. The Registrar may, after giving notice of the default to the opponent consider the opposition as withdrawn, unless the default is remedied within the time specified in the notice. Court proceedings A prerequisite is now required to institute proceedings before the Federal Court,under certain circumstances. The trademark owner must show that it has used the mark before asserting its rights before the courts where proceedings are filed within the first three years of its trademark registration, in cases where such proceedings allege infringement of a registered trademark or depreciation of goodwill. Thus, the owner of a registered trademark will only be able to obtain relief if the trademark was used in Canada within the first three years of registration, or if the absence of use in Canada was due to special circumstances that excuse such absence of use. Appealing the Registrar’s decision The new provision recognizes that the court may exercise any discretion vested in the Registrar when allowing the submission of evidence that was not provided before the Registrar. This provision requires leave of the court for the submission of evidence on appeal, to prevent minimal evidence from being presented at first instance and then supplemented on appeal. The administration of justice is best served when the court can settle a case as a whole at the earliest opportunity. Transitional measures The Registrar is expected to publish transitional measures on April 15 or after April 1, 2025. Conclusion In conclusion, the upcoming changes to the Act and the Regulations, effective April 1, 2025, represent a significant step towards enhancing the legal framework surrounding trademarks in Canada, thereby addressing the growing need for transparency and efficiency in this field. It is crucial for businesses and professionals in the sector to familiarize themselves with these changes to ensure compliance and optimize the management of their trademarks.

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