On June 28, 2017 the Supreme Court of Canada released its highly anticipated decision in Google Inc. v. Equustek Solutions Inc., 2017 SCC 34 (PDF), which arose out of intellectual property litigation between Equustek and a third party. The Court upheld an injunction restraining Google, a non-party to the litigation and non-resident corporation, from publishing offending websites in its search results worldwide.
The landmark decision raises the possibility for Canadian organizations and individuals to seek global protection from a wide range of unlawful activity on the internet, including in relation to intellectual property infringement, contract and tort claims, breaches of privacy, and defamation, among others. The decision is also controversial in that it raises the spectre of censorship of Google search results based on local laws and regulations around the world. Daniel Byma of Fasken Martineau's Vancouver office acted for the Electronic Frontier Foundation, one of the interveners before the Supreme Court of Canada.
In the underlying action, Equustek sued a third party for unlawful appropriation of trade secrets and trademark infringement. Equustek designs, manufactures and sells industrial network interface hardware, which they alleged the defendants passed off as their own. Equustek also alleged that the defendants used Equustek's confidential information to produce a competing product.
Equustek obtained a number of court orders prohibiting the defendants from carrying on business. In contravention of the orders, the defendants continued to sell the offending products on a number of different websites. Internet search engines, including Google, often directed customers to the offending websites where the infringing products were being offered for sale.
The plaintiffs applied to the B.C. Supreme Court for an interlocutory injunction restraining Google from including the offending websites in Google search engine results worldwide. Madam Justice Fenlon held, in Equustek Solutions Inc. v. Jack, 2014 BCSC 1063 (PDF), that the court had in personam jurisdiction over Google and authority to issue an injunction with extra-territorial effect against a non-party where it is just or convenient to do so.
The B.C. Court of Appeal upheld the Madam Justice Fenlon's decision in Equustek Solutions Inc. v. Google Inc., 2015 BCCA 265.
Supreme Court of Canada Decision
In a 7-2 majority reasons written by Madam Justice Abella, the Supreme Court of Canada upheld the lower courts' decisions and the worldwide injunction restraining Google from including the offending websites in its search results.
The Court rejected Google's argument that a non-party to a proceeding cannot be subject to an interlocutory injunction. The Court held that the contours of the test for injunctive relief are unchanged with respect to non-parties. While the impact of an injunction on a non-party is a valid consideration, a non-party can be subject to an injunction where its conduct obstructs "the course of justice." The Court pointed to Norwich orders, which compel non-parties to disclose information, and Mareva injunctions, which can result in an order against a non-party, as examples of where non-parties are bound by interlocutory injunctions. The Court held that in order to preserve Equustek's rights pending the outcome of a trial, Google's assistance was required: "Without injunctive relief, it was clear that Google would continue to facilitate […] ongoing harm" caused by the defendants to Equustek.
The Court similarly rejected Google's argument that it was improper for a Canadian court to issue an interlocutory injunction with extraterritorial effect. The parties did not dispute that Google's business presence in British Columbia was sufficient to establish in personam and territorial jurisdiction. The Court held that when a court has in in personam jurisdiction, and where it is necessary to ensure the effectiveness of an injunction, a Canadian court may grant an injunction enjoining a party's conduct anywhere in the world. In this case, the unlawful conduct was occurring both online and globally. The Court stated: "the Internet has no borders – its natural habitat is global. The only way to ensure that the interlocutory injunction attained its objective was to have it apply where Google operates – globally."
The Court went on to find that the interlocutory injunction restraining Google's search engine results worldwide was necessary to prevent the harm that flowed from the unlawful conduct online. The majority reasons emphasized that the injunction's worldwide effect does not tip the balance of convenience in Google's favour since it is not required to take action around the world, but rather only where the search engine is controlled - a step that can be taken with relative ease.
The contention that the lower court's order violated international comity was dismissed as "theoretical". The Court underscored that most countries will likely recognize the violation of intellectual property rights as a legal wrong.
Similarly, the Court held that freedom of expression concerns were not engaged in a manner that tipped the balance of convenience toward Google, as the speech in question facilitated the sale of unlawful goods. To the extent that the injunction would require Google to violate the laws of another jurisdiction, including interfering with freedom of expression, the Court held that Google may re-apply to the BC Court to vary the order. The Court held that it would be inequitable to require Equustek to demonstrate country by country that the order is legally permissible, instead placing the burden on Google to seek to vary the order in appropriate circumstances. It also remains open to Google to apply to vacate the order if it is in effect for an inordinate amount of time.
In essence, the Court found that while Google was not liable for the harm suffered by Equustek, it was a key player involved in the harm that the defendants were causing to Equustek. The Court held that the countervailing harm to Google was minimal or non-existent, and that Google would not be inconvenienced in any meaningful way by de-indexing the offending websites. On balance, the Court held that the worldwide interlocutory injunction was the only way to mitigate the harm to Equustek and preserve its continued viability prior to trial.
In dissenting reasons, Côté and Rowe JJ. found that neither the test for an interlocutory or permanent injunction had been satisfied and that several factors called for judicial restraint. In particular, the dissenting reasons found that injunction was effectively a final remedy, providing Equustek with more equitable relief than it sought. As a final order, an extensive review of the merits of the underlying action was therefore required, which had not been done in this case.
The dissenting reasons also expressed concern with a mandatory injunction against a non-party, requiring ongoing court supervision, and highlighted that Equustek had alternative remedies, such as pursuing the defendants' assets in other jurisdictions.
Important Implications of the Decision
Google Inc. v. Equustek Solutions Inc., et al. is a landmark decision with far-reaching implications with respect to enforcing rights beyond Canadian borders. The seemingly limitless global reach of the internet and e-commerce brings with it a myriad of potential harms, including invasions of privacy, defamation, trademark infringement and passing off, copyright infringement, and other forms of unlawful activity, which can affect both individuals and organizations. This decision may provide plaintiffs with an effective means to help mitigate such harms arising through the internet, whether emanating from the conduct of domestic or foreign-based defendants.
With its potential to mitigate the harmful effects of websites which contain defamatory material, or sensitive or embarrassing personal information in particular, this decision may also bring Canadian law a further step closer to the developing E.U. jurisprudence on the "right to be forgotten" (PDF) online. In this respect, earlier this year Canada law had already taken a significant step in that direction in A.T. v. Globe24h.com, 2017 FC 114 in which the Federal Court established that the Personal Information Protection and Electronic Documents Act ("PIPEDA") applies to activities carried out abroad that have an impact on persons resident in Canada, and that Canadian courts can assume jurisdiction to make extra-territorial orders against foreign entities. This important issue has recently been the subject of extensive Parliamentary hearings in Canada over many months before the Standing Committee on Access to Information, Privacy and Ethics.
Conversely, this decision leaves open the possibility that Canadian courts may make orders which infringe on the freedom of expression of foreign organizations and individuals, or even violate foreign law. While the Court held that a worldwide interlocutory injunction could be varied in such circumstances, there may be situations where foreign non-parties are unaware that their rights have been impacted, or where seeking to vary an order in Canada is not economically realistic.
The reciprocal effects of the decision also remain to be seen. It is not difficult to imagine scenarios in which foreign courts may make similar orders that have the effect of restraining Google search results in ways that impact the affairs and conduct of Canadian organizations or individuals, even if such conduct is otherwise permitted under Canadian laws. The Canadian individual or company may suffer harm as a result, even though they have not violated Canadian laws or had an opportunity to defend themselves in the foreign court. Similar ripple effects could exist around the world, with courts in any local jurisdiction ordering Google to refrain from delivering search results that may impact organizations and individuals any number of other countries. Although the Equustek case arose in a commercial context, many free speech advocates in particular have sounded the alarm about the potentially devastating impacts that the decision could have on online freedom of expression.
Beyond the Court's clear direction that orders of the type at issue in this case could be varied on application, there is also the possibility that a party could challenge the enforceability of the order outside of British Columbia. Such a challenge, could have a significant impact on the effectiveness of the injunctive relief obtained by the plaintiff and bring into conflict the court orders of different jurisdictions in which Google operates.