Supreme Court of Canada states “The Internet has no borders” in upholding global injunction in search results case

by Smart & Biggar
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The Supreme Court of Canada issued its decision in Google v. Equustek, 2017 SCC 34, today, upholding an injunction requiring a non-party to an infringement action, Google, to remove links to infringing websites from its global search results. This marks the first time that Canada’s highest court has directly considered the power of Canadian courts to issue global injunctive relief against a non-party as a remedy for infringement on the Internet. The decision represents a powerful statement that Canadian courts of equity have broad jurisdiction to issue injunctions against parties and non-parties alike, including with extraterritorial effect, provided the injunction would be just and equitable in all the circumstances of the case.  

Background

The case involves a small technology company, Equustek, whose former distributor, Datalink, began to re-label one of Equustek’s products as its own. Datalink also acquired confidential information and trade secrets belonging to Equustek and used them to design a competing product. Datalink initially defended Equustek’s infringement action, but eventually abandoned the proceeding and left Canada.

Despite interlocutory injunctive orders against it by the British Columbia Supreme Court, Datalink continued to sell infringing products through a large network of websites in flagrant violation of the Court’s order. These websites could be readily located by consumers through various online search engines, the most prominent of which is Google™, operated by Google, Inc. (“Google”). Equustek sought assistance from Google to remove infringing content from its search results. In response, Google requested that Equustek obtain a court order prohibiting Datalink from carrying on business on the Internet. Google then voluntarily cooperated to enforce the resulting order against Datalink by de-indexing 345 web pages available on its Canadian search page at google.ca, but Google did not de-index it search results globally. As such, all of the infringing content was available to users outside of Canada, or to Canadians who searched on google.com. In addition, Datalink moved the infringing content to new web pages on its websites to defeat the order.

Equustek then sought a worldwide interlocutory injunction directly against Google, a non-party to the action, requiring it to de-index any part of Datalink’s websites on any of its search results worldwide. The British Columbia Supreme Court granted the injunction and it was upheld on appeal.

The Supreme Court of Canada granted Google leave to appeal and also granted leave to intervene to over 30 parties.

Issues at Stake at the Supreme Court of Canada

When accepting the appeal, the Supreme Court identified three questions at issue:

  • Under what circumstances may a court order a search engine to block search results, having regard to the interest in access to information and freedom of expression, and what limits (either geographic or temporal) must be imposed on those orders?
  • Do Canadian courts have the authority to block search results outside of Canada's borders?
  • Under what circumstances, if any, is a litigant entitled to an interlocutory injunction against a non-party, in this case Google, that is not alleged to have done anything wrong?

The Decision

The Court was split 7-2. The majority affirmed that the classic Canadian interlocutory injunction jurisprudence applied to this case and did not require any modification (as had been requested by certain intervenors). The three-part test to obtain an interlocutory injunction continues to be that set out in RJR MacDonald:

  • Is there a serious issue to be tried?
  • Would irreparable harm result if the injunction were not granted?
  • Does the balance of convenience favour granting or refusing the injunction?

The Court noted that ultimately, the question to be asked is whether granting the injunction would be just and equitable in all the circumstances of the case.

The Court expressly affirmed several principles concerning the granting of injunctive relief, including the following:

  • that the decision of a trial court to grant an interlocutory injunction is a discretionary one and is entitled to a high degree of deference by appellate courts
  • that injunctions are equitable and thus courts with equitable jurisdiction have unlimited power to grant injunctions, subject to any relevant statutory restrictions
  • that the purpose of interlocutory injunctions is to ensure that the subject matter of litigation will be “preserved” so that effective relief will be available when the case is determined on its merits
  • that an interlocutory injunction is enforceable until trial or some other determination of the proceeding

The Court then applied the three-part RJR MacDonald test for injunctions.  Google did not dispute the “serious claim” or “irreparable harm” parts of the test, but focused its argument on the “balance of convenience” part. Google presented three arguments, which were each dismissed on the evidence before the Court.

1. Injunctions can apply to non-parties

First, Google argued that innocent non-parties cannot be made subject of an interlocutory injunction. The Court noted this is contrary to long established jurisprudence, referring to its decision in MacMillan Bloedel where it held: 

“it may be confidently asserted … that both English and Canadian authorities support the view that non-parties are bound by injunctions.”

The Court pointed to a variety of other orders available against non-parties, such as Norwich Orders (orders to compel non-parties to disclose information or documents) and Mareva injunctions (orders to freeze assets to prevent dissipation before trial). The Court also cited the Cartier decision of the Court of Appeal of England and Wales granting an injunction against five innocent non-party Internet service providers in order to block websites selling counterfeit CARTIER brand luxury goods.

2. Injunctions can have extraterritorial effect

Second, Google argued that it is improper to issue an injunction with extraterritorial effect. The Court held that this argument could not succeed since it was established in the lower courts of British Columbia that Google carried on business in the province, which was sufficient to establish in personam and territorial jurisdiction. Google did not appeal those findings. The Court noted there is a long history of jurisprudence that once a court finds in personam jurisdiction, it can grant an injunction enjoining that person’s conduct anywhere in the world, where it is necessary to ensure the injunction’s effectiveness. It was also held that a worldwide injunction was the only practical way to ensure Google did not passively facilitate Datalink’s continued breach of the Court’s orders. The Court stated that:

“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 stated the global nature did not tip the “balance of convenience” part of the test in Google’s favour. Also, the Court stated Google would not be inconvenienced by the order and had acknowledged it can and often does alter its search results, such as to avoid generating links to child pornography or hate speech.

Lastly, on the issue of extraterritoriality, the Court expressly rejected the argument that a global injunction violates comity as being theoretical. In this regard, there was no evidence that the injunction would violate the laws of any country. The Court also did not see freedom of expression issues being engaged in any way that would tip the balance of the argument towards Google, stating:

“We have not, to date, accepted that freedom of expression requires the facilitation of the unlawful sale of goods.”

However, the Court indicated Google was free to apply to modify the injunction if it had evidence it would violate the laws of another jurisdiction, including freedom of expression.

3. Interlocutory injunctions should provide practical results

Third, Google argued the injunction was in effect a permanent injunction. The Court disagreed and found that even an interlocutory injunction that continues for many years is not permanent and if it is was in place for an inordinate amount of time, it is open from a party to have it varied or vacated.

The evidence is that Datalink ignored all previous court orders, that Equustek made efforts to locate it with limited success, and that Datalink could only be commercially viable because Google’s search engine directs potential customers to its websites. The Court found that while this does not make Google liable, it makes it the determinative player against which the injunction is necessary in order to mitigate the harm. Therefore, despite the fact that the websites would still be directly accessible and available through other search engines (with much smaller market share), an interlocutory injunction was the most appropriate solution.

Minority

The minority did not dispute that the power of courts of equity to issue injunctions over in personam parties is unlimited, and includes non-parties, but it would have exercised juridical restraint to deny the injunction based on the facts of the case.

The minority noted five factors it found weighed in favour of restraint: (1) the practical effect of the order is final, (2) Google is a non-party, (3) the order requires positive action by Google and does not simply prohibit action, (4) the Order is not completely effective in resolving the infringement, and (5) alternatives are available.

Conclusion

The decision represents a powerful statement by the Supreme Court of Canada that Canadian courts of equity have broad jurisdiction to issue injunctions against parties and non-parties alike, including with extraterritorial effect, provided the injunction would be just and equitable in all the circumstances of the case.  

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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