Canadian Lawyer InHouse

19 canadianlaWyermag.com/inhouse june 2014 harding: I could talk for two hours about regulatory issues. I don't think you can be- gin to comprehend the regulation in bank- ing and in wealth management and insur- ance. Particularly since the global fi nancial crisis we have seen a tidal wave of regula- tion from every corner and so certainly, the volume we have seen in the last fi ve years is unprecedented. The other change we've seen is that regulators are increasingly giv- ing shorter time frames to implement from the time they've fi nalized something to the time you have to be compliant. When you're talking about a change to your IT system, it can't be done in a few weeks or months. So whether it's CASL, or our favourite one lately, FATCA (Foreign Account Tax Com- pliance Act), the system changes are huge. We have a minimum of three-to-four on-site examinations a year by one or two regulators. We also have some regulators do mystery shopping on our frontline staff. It's a combination of following a com- plexity of systems, training, and very, very, very short time frames that is making the regulatory landscape, in and of itself, our number one issue. inhouse: How much of it do you man- age in-house and how much do you draw on outside counsel for advice? harding: It has to be kept in-house be- cause only you know the risk tolerance, only you know the systems, only your training department can put in place the training system. Legal has to be involved, and we can sometimes rely on outside counsel to help us interpret some of the legislation, but by far, it still falls on the legal department because we're working directly with com- pliance and with the business units. croFT: I think we need to rely on outside counsel to help us keep up on the myriad of regulations coming out, and like Bryce, we operate in a number of countries that we can't possibly be sure we're on top of all of the regulations and the changes that are coming down. But as Gail said, I would absolutely agree the application to your business can only be done in-house where you understand the people, and where that knowledge is required. It really is a team ef- fort with outside counsel, but it couldn't be done without in-house counsel bearing the greater share of the load. BorBridge: At our company we have one lawyer who does nothing but regulatory issues — that's his job, and as the piles of paper on his desk continue to increase, be- cause of regulation, I think we'll end up having more lawyers who deal with nothing but regulatory matters. We do lean on an outside counsel as well, particularly when it comes to U.S. compliance, getting our product through pipelines or on barges or however we're getting it to market; so we do lean on outside counsel especially in the U.S., and we do in Canada as well. JacKson: I just don't see how you could rely on out- side counsel other than for advice about interpretation of a particular issue. It will be interesting to see how things evolve once CASL is in effect. I can see where, down the road, we might consult with outside counsel on particular issues; but to really understand and operationalize and train people, I think it's an in-house function. mclean: I would agree, and at the risk of oversimplifying, you can use outside coun- sel to identify the regulations that may ap- ply to you but when it comes to applying the law or regulation to the facts of your business, that's in-house counsel's job; and you need to have a good understanding of your business to make sure you're identify- ing all potential areas where that regulation could cause change for different behaviour in the business. inhouse: To what degree do issues around intellectual property provide a challenge to your legal departments? mclean: Forgive me if the colour drains from my face, but we've had signifi cant intellectual property chal- lenges, partly as a result of our David and Goliath in- dustry, where we compete with some companies that are 10, 20, even 30 times our size in the oilfi eld services industry. But in the patent system, we're really disenfran- chised right now for a few reasons, and I think some of them stem from the patent offi ces themselves, and the legislation will need to change. I speak boldly because we have some scar tissue on this issue. Firstly, the overly broad patenting that seems to be proliferating in Canada and the U.S. is a problem, and I think there's a big discon- nect between the patent examiners, their agenda, and the agenda of intellectual prop- erty lawyers from a policy standpoint. Secondly, there is the increase in non- operating companies prosecuting patents. We've seen a lot of patent trolling in the U.S., and I think this is going to defi nitely expand to copyright trolling, as we're start- ing to see more tools being created to troll the Inter- net for copyright viola- tions. That one probably isn't going to affect our company; but we are an Internet services pro- vider, so we need to deal with it, and it's going to add cost. The third issue I think is the rise of large companies using patents and their patent portfolio as a profi t centre more than just a competitive tool. It's abus- ing a potential competitive tool to create either additional competitive positions or, in some cases, outright anti-competitive behaviour. We simply can't publish a patent applica- tion everyday like some of our competitors can, and that sort of behavior is causing the medium and small businesses in a place like Calgary, where we're known for great oil- fi eld technology, to be stifl ed. BorBridge: Our challenges are limited to trying to differentiate different technolo- gies based on very, very small differences. The engineers and geologists will say, "No, this is a lot different than their technol- ogy because . . ." and they have a reason. But from the big picture, it looks very, very similar, and trying to make sure you've differentiated enough, not just to satisfy the patent offi ce, but to ensure you're pro- tected from the risk management point of view down the road from claims of patent infringement, that's a big job, and it's a very important job. intellectual property chal- lenges, partly as a result of our David and Goliath in- dustry, where we compete with some companies that are 10, 20, even 30 times our I just don't see how you could rely on out- side counsel other than for advice about interpretation of a particular issue. It will be interesting to see how things evolve once CASL is in effect. I can see where, down the road, we might consult with outside counsel on particular issues; but to really understand and operationalize and train ing to see more tools being created to troll the Inter- net for copyright viola- tions. That one probably isn't going to affect our company; but we are an Internet services pro- vider, so we need to deal with it, and it's going to add cost. The third issue I think is the rise of large companies using patents of the regulations and the changes that are mclean: from my face, but we've had signifi cant

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