Bereskin & Parr LLP - Canada
The Supreme Court recently issued a landmark decision in Google, Inc v Equustek Solutions Inc (2017 SCC 34) which confirmed that Canadian courts have jurisdiction to issue interlocutory injunctions against a party’s activities that extend beyond Canada and have global reach. The court noted that "the Internet has no borders ‒ its natural habitat is global” and, as a consequence, remedies must also be global. For the court majority, Google was the “determinative player in allowing the harm to [Equustek to] occur”. Further, and in comparison, the harm to Google would have been “minimal to non-existent”. The court saw the injunction as the “only effective way to mitigate the harm to Equustek”.
The decision affirms a British Columbia Court of Appeal decision (2015 BCCA 265) and the decision of a lower British Columbia court (2014 BCSC 1063) requiring Google Inc, a non-party to the underlying infringement case, to de-index webpages advertising the sale of alleged infringing network interface hardware from its worldwide search results.
The decision could have far-reaching consequences and make Canadian courts a preferred forum for litigating disputes with a Canadian and international component.
Alongside its decision in Douez v Facebook (2017 SCC 33), the Supreme Court has demonstrated that the considerations in respect of services rendered over the Internet must be assessed differently compared to the bricks-and-mortar world of the past. In both decisions, the majority of the court acknowledged the crucial role that the Internet plays in mediating our experience of reality and as a means for commerce. In Douez, the court stated that “having the choice to remain ‘offline’ may not be a real choice in the Internet area”.
These two decisions will likely have meaningful implications for both businesses and ordinary consumers. For businesses facing harm from counterfeiters and that have ties to Canada, the Equustek decision is a salve, since it suggests that such businesses may be able to rely on Canadian courts to be their one-stop shop for seeking such relief. For large internet-based search engines and marketplace facilitators (eg, Google and Amazon), the decision is likely to result in more requests being made of and order issuing against such companies.
These decisions represent the Supreme Court’s recognition of the crucial role that internet-based services play in the personal and commercial lives of Canadians, and that such a world is markedly different from the tangible world of the past, where consumers had effective choices between service providers and wrongdoings halfway across the world had little chance of being felt in Canada.
The majority of the court, led by Justice Abella who was joined by six other judges, dismissed the appeal brought by Google of a decision from the British Columbia Court of Appeal, which affirmed an injunction issued by the lower British Columbia court requiring Google to de-index certain webpages from its worldwide search results. The underlying dispute stemmed from a December 2012 order prohibiting former distributors of Equustek’s industrial network interface hardware ‒ Morgan Jack and Datalink Technologies Gateway Inc ‒ from selling counterfeits of Equustek’s products through various websites, in violation of Equustek’s trade secrets and other intellectual property.
Following that order, Google, which was a non-party to the underlying action, voluntarily complied with Equustek’s request to remove specific webpages or uniform resource locations (URLs) from its Google.ca search results, but refused to block an entire category of URLs ‒ sometimes referred to as ‘mother sites’ ‒ from its worldwide search results. Equustek therefore sought an injunction to force Google to de-index the offending webpages from Google’s worldwide search results. The Supreme Court’s decision is the culmination of Equustek’s efforts.
A number of third parties intervened, including the Canadian Civil Liberties Association, Human Rights Watch, the Electronic Frontier Foundation and the International Federation of Film Producers Association.
The issue before the Supreme Court was whether it would be equitable to order Google to (pending trial) globally de-index the websites of a company that, in breach of several court orders, was using those websites to unlawfully sell network interface hardware that infringed Equustek’s intellectual property.
In affirming the worldwide interlocutory injunction, the Supreme Court reviewed the underlying purposes and history of injunctions generally (ie, as discretionary and equitable remedies) and assessed whether the facts of this case met the following three-part injunction test set out in RJR MacDonald Inc v Canada (Attorney General) (1994 1 SCR 311 (SCC)):
- there is a serious issued to be tried;
- the party seeking the injunction would suffer irreparable harm if the injunction were not issued; and
- the balance of convenience favours the grant of the injunction.
Importantly, Google did not contest whether the facts of the case met the test. Rather, it argued that:
- an injunction in this case would be ineffective;
- as a non-party to the action, it should be immune from such orders;
- it had already de-indexed the subject webpages from its Google.ca search so there was no need for a worldwide order; and
- the balance of convenience weighed against granting the order because of the potential impact on freedom of expression.
The court disagreed with Google on each point.
The majority took the position that being a non-party was a non-issue: the jurisprudence supports the issuance of injunctions against non-parties, especially where (as here) the non-party essentially facilitated the wrongdoing (eg, as was the case in the Norwich orders). As the use of Google’s search engine was crucial to the former distributors being able to sell counterfeit goods (ie, it was “common ground” that the infringers would be “unable to carry on business in a commercially viable way unless its websites were in Google’s search results”), the injunction against Google was necessary to prevent those former distributors from being able to continue to circumvent the underlying order to not sell such goods.
The court recognised that the problem in this case was global in nature (“the Internet has no borders"). As Google’s operations are similarly global in nature, the majority concluded that the only way to ensure the injunction’s effectiveness would be to have it apply worldwide:
“If the injunction were restricted to Canada alone or google.ca... the remedy would be deprived of its intended ability to prevent irreparable harm [since] [p]urchasers outside Canada could easily continue purchasing from [the counterfeiter’s] websites, and Canadian purchasers could find [these] websites even if those websites were de-indexed on google.ca.”
The court dismissed Google’s argument that the order would violate rules of international comity, including in respect of freedom of expression, as purely theoretical, and found that, in any event, if the order were found to violate the laws of another jurisdiction in the future, Google could always apply back to the British Columbia courts to vary the injunctions in respect of that jurisdiction.
This portion of the decision may incentivise litigation with a Canadian and international component to be brought in Canada, as the court effectively suggested that enforcement issues in respect of the injunction need not all be addressed at the start; rather, the order should be left open to amendment as and when issues arise (a position that the dissent concluded weighed against issuing the injunction, as it would require “cumbersome court-supervised updating”, which should generally be avoided).
The prevailing judges had difficulty assessing:
“how [the order] interferes with what Google refers to as its content neutral character. The injunction does not require Google to monitor content on the Internet, nor is it a finding of any sort of liability against Google for facilitating access to the impugned websites. As for the balance of convenience, the only obligation the interlocutory injunction creates is for Google to de-index the Datalink websites. The order is, as Fenlon J. observed, ‘only a slight expansion on the removal of individual URLs, which Google agreed to do voluntarily’. Even if it could be said that the injunction engages freedom of expression issues, this is far outweighed by the need to prevent the irreparable harm that would result from Google’s facilitating Datalink’s breach of court orders.”
The dissenting judges ‒ Justices Cote and Rowe ‒ would have allowed the appeal, conceding that, while the British Columbia courts may have had jurisdiction to issue the order, they should not have done so. What was persuasive to the dissenting judges was that the interlocutory injunction amounted to a final determination of the action, as it removed any benefit from proceeding to trial, and therefore, the lower court judges should have performed an extensive review of the merits of the case before issuing it (ie, a trial should have been required).
Cote and Rowe also disagreed with the majority that Google had facilitated the counterfeit activities since, regardless of Google, the former distributors would have continued to sell the counterfeit goods and could have used social media, emails or other matter to publicise such sales. This fact also demonstrated to the dissenting judges that the order would not be effective. Such perceived ineffectiveness was reflected in their dissatisfaction with the nature of the order itself:
“the Google Order is mandatory and requires ongoing modification and supervision, because [the former distributors are] launching new websites to replace de-listed ones… Courts should avoid granting injunctions that require such cumbersome court-supervised updating.”
The fact that other avenues were open to Equustek ‒ the judges had suggested pursuing internet service providers ‒ also indicated that the order should not have been granted.
This decision may encourage Canadian businesses or international businesses with Canadian ties to seek remedies on a worldwide basis in Canada, including against parties not directly perpetrating the underlying infringement, particularly where the conduct sought to be stopped occurs over the Internet. For businesses where the sale of counterfeit products is an ongoing issue, the Equustek decision may have created a new and effective tool in their litigation arsenal.
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This is a co-published article whose content has not been commissioned or written by the IAM editorial team, but which has been proofed and edited to run in accordance with the IAM style guide.