The Supreme Court of Canada’s recent and much-anticipated decision in Google Inc. v. Equustek Solutions Inc. is extremely important for many reasons. It has been applauded by Canadian companies whose intellectual property rights are being infringed by overseas companies, but, it has left many observers concerned about the ability for local courts to have a global impact on the regulation of the Internet.

It should not be at all surprising that over 30 entities intervened in the case – including civil liberties and human rights groups, music and publishing industry groups, and associations of reporters. The Supreme Court upheld an injunction that requires Google to de-list a website from its global search index, not just google.ca. While the Supreme Court’s decision may be a boon to Canadian companies whose intellectual property is being infringed by third parties around the world, the decision has wide-ranging consequences.

On the one hand, the Supreme Court’s decision provides comfort for Canadian businesses whose intellectual property is being infringed by overseas competitors. A worldwide injunction provides significantly more practical relief than an injunction limited in scope to Canada. The Internet serves as an effective platform for illegal commercial activity, and companies have faced significant challenges when trying to enforce their rights against infringers. Requiring Internet intermediaries such as Google to comply with worldwide orders is one way to enforce parties’ rights and disincentive illegal online activities. Music Canada, for example, applauded the Supreme Court’s decision, with its President and CEO stating in a press release that “this is welcome news for creators of all stripes who rely on the Internet as their primary market and for whom illegal online activity can instantly wipe out careers and destroy investment in new releases. Today’s decision provides a vital remedy to address illegal online activities and enforce the rights of creators.”

On the other hand, there is concern that the Supreme Court went too far in asserting its jurisdiction on worldwide Internet activities. While this case dealt with an intellectual property dispute in which one party’s rights appeared to have been quite clearly violated, other cases may deal with much more contentious issues. The prospect of a foreign government relying on their local court’s decisions to compel Google or another large Internet intermediary to restrict access to certain websites because of local mores is certainly not appealing. International comity may be impacted, as local courts assert jurisdiction over the actions of companies well beyond the scope of their local jurisdiction.

The decision raises additional questions about the role that large Internet intermediaries – such as Google, Facebook and Twitter – should play when it comes to regulating Internet activities. The Supreme Court’s decision provides courts with the opportunity to shape the regulation of Internet activities – for better or for worse.

Background

As previously discussed on The Spotlight, Equustek Solutions Inc. (Equustek) alleged that the Datalink defendants (“Datalink”) unlawfully used Equustek’s trade secrets to manufacture a competing product and then relied on search engine results to target customers. Google voluntarily removed Datalink’s 345 URLs from search results on Google.ca, but Google refused to remove the results from its search platforms in other countries. Datalink continued to create new web pages with different URLs, leading to a seemingly endless game of “whack-a-mole.” The majority of Datalink’s sales of the competing product occurred outside of Canada. To alleviate this ongoing concern, Equustek sought a worldwide injunction to require Google to block certain infringing websites from its search results around the world. The Supreme Court’s 7-2 decision upheld the order of the B.C. Court of Appeal, which required Google to globally de-index the websites of Datalink.

Google did not dispute that Equustek had a serious intellectual property claim against Datalink, nor did Google dispute that Equustek was suffering irreparable harm as a result of Datalink’s ongoing sale of the competing product. Google even acknowledged that it was inadvertently facilitating harm through its search engine, which was leading purchasers directly to the competing Datalink websites. However, Google argued that the injunction was not necessary, nor would it be effective, in preventing such harm. Google challenged the extraterritorial reach of the injunction and raised freedom of expression concerns with the making of such an order.

The Supreme Court’s Decision

The majority of the Supreme Court (Majority) concluded that a worldwide injunction was necessary to prevent the irreparable harm to Equustek that results from Datalink carrying on its business on the Internet. The Majority’s decision was based on the following arguments:

  • The Internet has no borders, and the only way to ensure that the injunction attained its objective of preventing irreparable harm was to have it apply everywhere that Google operates, being globally.
  • The majority of Datalink’s sales take place outside of Canada; restricting the injunction to Canada would limit the intended remedy of preventing irreparable harm.
  • If the injunction were restricted to google.ca, purchasers outside of Canada would easily continue to purchase from Datalink, and even Canadian purchasers could easily find Datalink’s websites online.

The Majority dismissed concerns regarding freedom of expression and remarked that Google’s concerns that complying with the injunction could lead to Google violating the laws of another jurisdiction were merely “theoretical.” The Majority appears to have ignored the potential impact of its ruling, namely that it has decided that Canadian courts have the ability to regulate the Internet for the entire world. If courts in other countries take a similar stance – especially on issues for which the predominant views differ amongst different countries – serious challenges could arise.

The dissenting judges (Dissent) held that the worldwide injunction should not have been granted. The Dissent’s decision was based on the following arguments:

  • Alternative remedies were available: Datalink has assets in France, and the B.C. Court of Appeal had urged Equustek to pursue a remedy in French courts. Equustek could have initiated proceedings in France or other jurisdictions with a link to Datalink’s websites.
  • The worldwide effect of the injunction could raise concerns regarding international comity.
  • Datalink’s websites can be found using other search engines, social media, etc., therefore Datalink’s websites are accessible whether or not Google de-lists them.
  • The discretionary factors affecting the granting of an injunction strongly favour judicial restraint. Google is a non-party who has not aided or abetted Datalink’s wrongdoing, and Google holds no assets of Datalink.

There are many questions that result from this Supreme Court decision. Some will question whether it is fair that Google should suffer the costs of having to de-list sites across its various websites resulting from a third party’s actions. What about the other search engines? Should they have been made party to this action with the same resulting obligations imposed on them? How will this impact Canadian rights when courts in other countries rule in the same manner and restrict Canadians’ access to information? There are good arguments for challenging this decision and some will rightly say that this simple de-listing from Google won’t shut down the problem, but if the Supreme Court had ruled differently, protecting Canadians’ intellectual property rights would have been rendered effectively useless.

This decision falls on the heels of a Federal Court of Canada decision rendered earlier this year, A.T. v. Globe24h.com, which showed the court’s willingness to protect Canadians’ rights, in this case privacy rights, internationally in the context of the online world.

What we do know is that the Canadian courts and, most importantly, the Supreme Court are willing to plant their flags down in the area of protecting Canadians’ rights in the online world. Future rulings in this area will be interesting to watch.