Commercial Litigation and Dispute Resolution Blog

On February 18, 2016, the Supreme Court of Canada granted Google leave to appeal the decision of the British Columbia Court of Appeal in the case of Google Inc. v. Equustek Solutions Inc., 2015 BCCA 265, a case previously discussed on this blog in October 2014 while it was before the Court of Appeal.  The appeal will have important ramifications for companies seeking to protect their intellectual property online, and raises questions about the appropriate length of the courts’ reach into cyberspace.

The respondent Equustek is a manufacturer of networking devices for industrial equipment that sued a former distributor and other defendants for infringing its intellectual property rights, including by passing-off, and by developing a competing product based on Equustek’s.  After the action was brought, the defendant stopped doing business in Vancouver and became solely web-based.  Certain of the defendants continued, and continue, to sell the infringing products around the world using a constantly changing network of websites, in defiance of court orders directing them to stop selling the infringing products, and in circumvention of court orders that took down specific web pages. Attempts to shut down this network of websites was likened to a game of ‘whack-a-mole’.

Equustek proposed an innovative method of pest control and obtained an order from the Supreme Court of British Columbia requiring Google to stop including all of the defendants’ web sites in its search results, not only in Canada, but across the world. This required Google not only to block search results on google.ca, viewable in Canada, but on google.com itself and all other Google sites, such as google.fr; google.co.uk, etc. The rationale behind seeking the order was that if one could prevent the offending websites from appearing in search results on Google sites, one would effectively render them invisible, given that Google sites accounted for over 70% of internet search traffic at the time.

Google had voluntarily de-indexed specific web pages from its google.ca search page, but refused to block the search results in other countries, as well as the “mother sites” which hosted the specific web pages. Google vigorously opposed the application on a number of grounds: that the injunction was beyond the jurisdiction of the court, would improperly affect an innocent non-party to the litigation, and would have an impermissible extraterritorial reach.

The Court held that it had jurisdiction over Google, had the ability to grant injunctions with extra-territorial effect against third parties and that, in this case, an injunction was warranted. The Court rejected Google’s arguments that removal of the defendants’ web sites from search results would constitute censorship, as Google regularly and voluntarily removed other websites from searches on other grounds. The Court also did not agree that Google’s First Amendment rights would be breached, or with Google’s objection that the order would therefore by unenforceable in California where its servers were located. The injunction required Google to cease indexing and/or referencing the defendant’s websites in its search engines across the world within 14 days.

The Court of Appeal upheld the judgment, finding that the Supreme Court had the necessary jurisdiction over Google, and that the spectre, raised by Google at the hearing, of Google being subject to restrictive orders from courts around the world concerned with their own domestic law, was a result of Google’s worldwide operations, and not a defect in the law. The Court of Appeal confirmed that the courts had the authority to make orders with extraterritorial effect in appropriate circumstances and that, in this case, the granting of the injunction was necessary and appropriate.

In a move that should surprise no-one, Google sought leave to appeal to the Supreme Court of Canada, and leave has now been granted. This is a complicated and rapidly evolving area of law that will require clarity  and which touches on issues that the Supreme Court of Canada is best placed to decide, including: freedom of speech; the degree to which, in an increasingly interconnected world, domestic courts should and, indeed, must, make orders with extraterritorial effect in order to enforce their judgments; and how courts will handle similar orders from other jurisdictions.

Among Google’s concerns is being subject to an increasing number of orders made in one jurisdiction but purporting to regulate its operations in another, possibly in ways incompatible with the laws or public policy of the receiving jurisdiction. From Google’s perspective, it acts as a passive indexer of other people’s information and should not be required to vet or censor search results according to the various concerns of the courts in every country in the world where Google operates, particularly where those results are not visible within the originating jurisdiction. It likely sees this case as a dangerous invitation for multiple jurisdictions to do so.

Conversely, in cases such as this, domestic remedies may be meaningless without the ability of Courts to make orders with extraterritorial effect, and to avail themselves of creative solutions such as the one provided in this case: cutting off wrongdoers from potential customers by removing their websites from Google, thus rendering the websites effectively invisible.

It is also worth noting that representatives of the film and music industries (among others) obtained intervenor status at the British Columbia Court of Appeal. Should the injunction be upheld, it could herald the arrival of an important new weapon in the fight against online file-sharing, which frequently involves wrongdoers who seek virtual refuge in a series of foreign jurisdictions where copyright laws are either underdeveloped or unenforced. Obviously, this would also raise the prospect of significant additional litigation in which Google and other search engine providers would be involved.

The appeal is likely to be heard in 2016.  Watch this space for updates.

With special thanks to articling student Tom Boyd for his assistance with the preparation of this article.