Case Law, Canada: Equustek Solutions Inc. v. Google Inc, Appeal against worldwide Google blocking injunction refused – Hugh Tomlinson QC

On 11 June 2015, the Court of Appeal for British Columbia handed down judgment in the controversial case of Equuestek Solutions v Google Inc (2015 BCCA 265) dismissing Google’s appeal against a worldwide injunction ordering it to remove websites from search results (2014 BCSC 1063). The interim injunction therefore remains in place.

Background

The background is set out in our post on the first instance decision.  In short the plaintiffs claimed that the defendants designed and sold counterfeit versions of their product and sued for trademark infringement and unlawful appropriation of trade secrets.

The plaintiffs obtained injunctions prohibiting the defendants from carrying on their business. The defendants continued the business in a clandestine manner using a variety of websites, and relying on web search engines to direct customers to those sites.

The plaintiffs said they faced a game of “whack-a-mole” – the defendants having effectively abandoned defence of their claim, but continuing to sell counterfeit product on their websites. Every time that Google blocked access to a specific webpage, the defendants would move the content to a new webpage within their site.

The plaintiffs successfully applied to the Chambers Judge in the Supreme Court of British Columbia for an injunction prohibiting Google from delivering search results pointing to the defendants’ websites.

Google appealed, arguing that the injunction was beyond the jurisdiction of the court, that it improperly operated against an innocent non-party to the litigation and that it had an impermissible extraterritorial reach.

On the appeal there were interventions from the Canadian Civil Liberties Association, the Electronic Frontier Foundation, the International Federation of Film Producers and the Interenational Federation of the Phonographic Industry.

Judgment

The judgment of the Court was given by Groberman J, with whom Frankel and Harris JJ agreed.

The first issue which was addressed was the territorial competence of the Supreme Court of British Columbia.  The Court noted that since the underlying action was within the territorial competence of the Supreme Court, the injunction application was as well (at [29]-[40]).

In any event, the Court held that there was a “real and substantial connection” between British Columbia and the facts on which the injunction application against Google was based [41].

The Court then examined the question as to whether Google was substantially connected with British Columbia in a way that is sufficient for the Court to assume in personam jurisdiction over it.

The Court agreed with the Judge’s analysis of the question as to whether Google did business in the province ([52]).  She had held that Google’s interent search websites are not passive information sites (2014 BCSC 1063 [48]) – they had an “auto-complete function” making suggestions based on previous searches.  Further, Google sold advertising to British Columbia clients (2014 BCSC 1063 [50]).

The Court of Appeal added a third  reason:

“In my view, it can also be said that the gathering of information through proprietary web crawler software (“Googlebot”) takes place in British Columbia. This active process of obtaining data that resides in the Province or is the property of individuals in British Columbia is a key part of Google’s business” ([54]).

The Court then went on to consider the power of the courts to grant injunctions against a non-party.  It noted that Norwich Pharmacal orders were made against non-parties and that there are

“many types of orders that are routinely made against non-parties – subpoenas to witnesses, summonses for jury duty and garnishing orders are common examples. Many of these orders have a statutory basis or are purely procedural, but others derive from the inherent powers of the court or are more substantive in nature” [64].

The Court considered the recent analysis of the English High Court’s power to grant injunctions in the case of Cartier International AG v British Sky Broadcasting Limited ([2014] EWHC 3354 (Ch))(see our discussion here).  It pointed out that the power of the Canadian courts to grant injunctions paralleled the law in England ([69] to [74]).

The Court concluded that where there is a justiciable issue, the granting of injunctions against third parties was a well-established practice of the courts to preserve the rights of the parties.

The Court rejected the argument that there was no jurisdiction to grant injunctions over non-residents:

“In fact, British Columbia courts are called upon to adjudicate disputes involving foreign residents on a daily basis, and the fact that their decisions may affect the activities of those people outside the borders of British Columbia is not determinative of whether an order may be granted. … Issues of comity and enforceability are concerns that must be taken into account, but they do not result in a simple rule that the activities of non-residents in foreign jurisdictions cannot be affected by orders of Canadian courts” [88].

It noted that the only comity concern articulated was that the injunction could interfere with freedom of expression in other countries [91].  It acccepted that a court should be very cautious in making orders which might place limits on expression in another country and

“Where there is a realistic possibility that an order with extraterritorial effect may offend another state’s core values, the order should not be made“. [92]

However, in this case there was no realistic assertion that the order would offend the sensibilities of any other nation [93].

The Court also noted orders made by Courts of other jurisdictions with international effect (citing, inter alia, a piece on the Inforrm blog). [95]

In short, the Court said that Google’s arguments had not persuaded it that there was

“either a jurisdictional or practical bar to the granting of an injunction of the sort pronounced by the chambers judge” [99].

Finally, the Court held that the tests for granting an injunction had been satisfied:

“The order made in this case is an ancillary order designed to give force to earlier orders prohibiting the defendants from marketing their product. Those orders were made after thorough consideration of the strength of the plaintiffs’ and defendants’ cases. Google does not suggest that the orders made against the defendants were inappropriate, nor do the intervenors suggest that those orders constituted an inappropriate intrusion on freedom of speech. [109]

Comment

This is an important decision with, potentially, very broad implications as to the way in which courts throughout the common law world will deal with issues concerning internet services.

Some commentators have described the decision as “disastrous” but this is an over-reaction.  As Emily Laidlaw points out on the ABlawg.ca, worldwide orders of this kind have been made for many years. She goes not to note that:

“Court orders with extra-territorial reach are, for practical purposes, the new reality for regulating abuse and other illegality online, particularly as against companies with global reach such as Google. The final hurdle of enforcement of an order or judgment in a US court remains unresolved”.

The Courts of many jurisdictions have been grappling with the issue of how to regulate illegality on the internet in circumstances where most of the major corporations are based in the United States where they have immunity from liability under under section 230 of the Communications Decency Act of 1996.

Although corporations such as Google are, understandably, concerned about the impact of “worldwide orders” of the kind made in this case, it is inevitable that, as an international business they will have to submit to the laws of the jurisdictions in which they operate.  The complex issues which arise are likely to lead to further litigation.

Although no announcement has yet been made it seems likely that Google will seek permission to appeal the order to the Supreme Court of Canada.