The Supreme Court of Canada has granted leave to hear an important case respecting the ability of Canadian courts to enjoin the behaviour of organizations with respect to their operations outside of Canada.

On February 18, 2016, the Supreme Court of Canada granted Google Inc. leave to appeal the judgment of the British Columbia Court of Appeal in Equustek Solutions Inc. v. Google Inc., in which the BCCA upheld an interlocutory injunction prohibiting Google from including specific websites in its search results worldwide.

The plaintiff’s request for the injunction against Google arose from a lawsuit in which the plaintiff alleged that the defendant was passing off its goods as those of the plaintiff.

After the plaintiff commenced the proceeding, the defendant left BC while still selling the knock-off goods over the internet, relying on search results to reach customers.  The plaintiff alleged that it lacked an effective way of stopping the defendant’s conduct, and sought an interlocutory injunction prohibiting Google from displaying the defendants’ websites in its search results anywhere in the world.  The Supreme Court of British Columbia deemed the injunction necessary to ensure that the orders against the defendants were effective, and granted the injunction.

Google appealed, arguing that the injunction represented an impermissible exercise of extra-territorial jurisdiction; improperly ensnared an innocent third-party (Google); and exceeded the Court’s jurisdiction.  Google also argued that the injunction violated Google and the public’s right to freedom of expression.

The BCCA rejected every one of Google’s arguments:

  • The Court found that it had jurisdiction over Google, both because the underlying action was connected to BC and because Google conducted business in BC (in response to Google’s concern that this meant that Google conducted business everywhere, the Court responded that if so, it was because of Google’s business model and was therefore Google’s problem);  
  • The Court found that it had the right to act globally, both based on historical precedent, and because doing so would not offend international comity;  
  • The Court found that the fact that Google was a third-party didn’t allow it to avoid the Court’s reach, based on precedent related to Norwich orders (whereby third‑parties are ordered to provide assistance to the Court); and  
  • The Court dismissed Google’s arguments related to free speech, asserting that speech designed to allow the infringement of intellectual property would rarely be protected.

In seeking leave to appeal, Google generally argued that the BCCA did not focus sufficiently on the public interest, particularly in respect of freedom of speech.  Beyond that, Google highlighted three issues raised by the BCCA decision.

  1. When should a court be able to block search results, given the importance of freedom of expression, and what limits should be imposed?  
  2. Do Canadian courts have the authority to block extra-jurisdictional search results?  
  3. When is a litigant entitled to an interlocutory injunction against an innocent third-party?  Should the current approach to granting injunctions against parties to litigation be properly applicable to non-parties to the litigation?

It is not clear why the SCC granted leave; however, it is interesting to note that the BCCA decision came out before the SCC’s decision in Chevron Corp. v. Yaiguaje, in which the SCC considered the scope of Canadian courts’ jurisdiction (albeit in the context of an action to enforce a judgment).  It is possible that the SCC will take the Google appeal as an opportunity to further clarify Chevron; it is also possible that the SCC simply sees a need to craft jurisdictional guidance for the internet age.  Whatever the result, both intellectual property owners and internet-based organizations will be watching closely.