Western Canada Business Litigation Blog

Orders Without Borders: Supreme Court of Canada affirms ability of Courts to grant worldwide injunctive relief against non-parties”

Posted in Intellectual Property
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Can a court bind something that knows no bounds? The Supreme Court of Canada did just that recently when it upheld a British Columbia Court of Appeal decision to grant an interlocutory worldwide injunction against Google, requiring it to de-index certain websites from its global search results, where such websites were being used to sell merchandise in violation of several court orders.

From the respondent Equustek’s perspective, the injunction and its worldwide scope were necessary to give actual effect to the prior court orders, and to safeguard its intellectual property rights in an interconnected world where borders are increasingly illusory. From Google’s perspective, this was a massive overreach by the Court of its authority to grant injunctions, creating an unwelcome precedent whereby Google would be dragooned into censoring content, and courts in one jurisdiction could affect what the world sees online.

In a globalized world where business is conducted, and indeed seemingly every aspect of life is lived on the internet, the ramifications of Google v Equustek are potentially significant.

The respondent, Equustek Solutions Inc., is a small technology company in British Columbia that manufactures networking devices for industrial equipment. In an underlying action, Equustek claimed that the defendants, including Datalink, began to re-label one of Equustek’s products and pass it off as Datalink’s own, while acting as a distributor of Equustek’s products. Datalink also allegedly acquired confidential information and trade secrets belonging to Equustek, and used them to design and manufacture a competing product. After defying a series of injunctions ordered by several judges of the Supreme Court of British Columbia to cease the alleged wrongdoing, and to cease operating or carrying on business though any website, Datalink abandoned the proceedings and apparently left the jurisdiction, carrying on its business from an unknown location, and continuing to sell the impugned product on its websites to customers all over the world.

Not knowing where Datalink or its suppliers now were, Equustek approached Google in September 2012 and requested that it de-index the Datalink websites, for the reason that, with approximately 75% of worldwide search traffic, Google was instrumental to Datalink being able to market and sell its infringing products. Google initially refused, forcing Equustek to obtain a court order prohibiting Datalink from carrying on business on the internet, which Equustek did, and advised that it would only voluntarily de-index webpages, as opposed to whole websites.  Later that year, Google de-indexed 345 specific webpages associated with Datalink.

However, de-indexing webpages but not entire websites was ineffective since Datalink simply moved the objectionable content to new pages within its websites. Further, Google limited the de-indexing to searches conducted on google.ca. Potential Canadian customers could, as a result, find Datalink’s websites on other Google sites, such as google.com, or the Google search engines for any other country. Moreover, since the majority of Datalink’s customers appeared to be located outside Canada, Google’s de-indexing was largely ineffective.

Equustek therefore sought an interlocutory injunction to enjoin Google from returning search results for any of the Datalink websites on any of its search pages worldwide. In June of 2014, the Supreme Court of British Columbia granted the order, finding that it had territorial competence over Google, that BC was the appropriate forum for the application, and that it had the authority to grant an injunction against Google with worldwide effect. The Court of Appeal of British Columbia upheld the injunction.

On appeal to the Supreme Court of Canada, Google did not dispute that there is a serious claim, or that that Equustek was suffering irreparable harm as a result of Datalink’s ongoing sale of its counterfeit product. Google acknowledged that it inadvertently facilitated the harm through its search engine which leads purchasers directly to the Datalink websites. Rather, Google argued that the injunction was neither necessary to prevent irreparable harm to Equustek nor effective in doing so, and grounded its appeal in the following arguments:

  1. As a non-party, Google ought not to be the subject of an interlocutory injunction;
  2. It was improper for the Supreme Court of British Columbia to issue an injunction with extraterritorial effect; and
  3. The injunction engaged concerns over freedom of expression, including whether or not Google would be violating laws regarding freedom of expression in other jurisdictions by complying with the injunction.

The Court found the first two points to be contrary to the jurisprudence. The authority to grant injunctions against someone who is not a party to the underlying lawsuit is well established in a variety of contexts, including civil disobedience, and preservation orders. Here, the necessity of enjoining Google flowed from the necessity of its assistance to prevent Datalink’s ability to defy Court orders.

Similarly, Google’s argument that it was improper to make an injunction with extraterritorial effect was contrary to the existing jurisprudence. The court found that it had in personam and territorial jurisdiction over Google because of its advertising and search operations in the province. Where a court has in personam jurisdiction, and where it is necessary to ensure the injunction’s effectiveness, it can grant an injunction enjoining that person’s conduct anywhere in the world. The Internet has no borders. Thus “the only way to ensure that the interlocutory injunction attained its objective was to have it apply where Google operates – globally.”

In response to freedom of expression concerns, the Court noted that this was not an order to remove speech that engaged freedom of expression values; it was an order to de-index websites operating in violation of court orders. The Court stated, somewhat acidly: “We have not, to date, accepted that freedom of expression requires the facilitation of the unlawful sale of goods.” The Court also noted that if Google has evidence that complying with the injunction would require it to violate the laws of another jurisdiction, including interfering with freedom of expression, it was at all times free to apply to the British Columbia courts to vary the order accordingly. To date, Google had not done so.

Finally, Google argued that the injunction would interfere with its “content-neutral” character. The court dismissed this concern, noting that Google often alters search results, including to avoid generating links to child pornography and websites containing “hate speech,” and with content that allegedly infringes copyright and content that is subject to court orders. What’s more, Google admitted it would not be inconvenienced or incur any significant expense in de-indexing the Datalink websites.

Ultimately, the Supreme Court noted that Datalink is only able to survive – at the expense of Equustek’s survival – on Google’s search engine which directs potential customers to its websites. While this did not make Google liable for the harm, it did make Google a determinative player in allowing the harm to occur. An interlocutory injunction is the only effective way to mitigate the harm to Equustek, and to preserve Equustek itself pending the resolution of the underlying litigation.  Since the harm to Google was minimal to non-existent, the Supreme Court upheld the British Columbia Court of Appeal’s decision.

This case offers some clarity around the degree to which courts can and indeed, sometimes must, make orders with extraterritorial effect, including as against non-parties, in order to protect the rights of litigants within their jurisdiction, and indeed to enforce their own orders. Similarly, the decision affirms the lower Court’s reasoning, covered in an earlier blog post, that, having elected to operate in many jurisdictions, a party affected by such an injunction could not ask the Court to presume hardship arising from potential effects of the order in those other jurisdictions. The decision will be significant not only in areas such as protection of intellectual property, but also in areas such as online defamation, where the internet has rendered jurisdictional boundaries largely irrelevant. In addition, it will be interesting to see if and how this decision is considered by the courts of other jurisdictions, and whether they adopt or even amplify the reasoning to, in effect, change what the world sees on the Internet. Mind you, people could always use Bing.

With thanks to articling student Rochelle Kelava for her assistance.