Archive for October, 2017

Canada’s Top Court and the Google Injunction

By Richard Stobbe

When can a Canadian court reach across borders and control online activity that happens outside Canada? The Supreme Court of Canada (SCC) handed down its decision in Google v. Equustek Solutions Inc., a case that started as a garden-variety intellectual property (IP) dispute, and ended up in the country’s top court as a significant guide for when the law will be imposed on those beyond Canadian borders, and those who are not even a party to the original dispute. The recent judgment deals with an IP owner – Equustek – who sought a practical remedy against an IP infringer, Datalink.

Equustek alleged that Datalink had engaged in misappropriation of trade secrets, passing off and breach of confidentiality. When Datalink refused to comply with the court’s original orders to cease sales of the allegedly infringing products, Equustek turned to Google, asking the search engine provider to block or de-list Datalink’s website. Equustek argued that it could only find an effective remedy against a determined infringer by blocking access to the infringing webpages, where the competing products were being sold by Datalink. (See our earlier posts for a more detailed summary of the facts of this case.)

The issue on appeal to the SCC was whether Google can be ordered, before a trial, to “globally de-index the websites of a company which, in breach of several court orders, is using those websites to unlawfully sell the intellectual property of another company.” Applying what it called “classic interlocutory injunction jurisprudence”, the SCC rejected Google’s counter-arguments and decided to uphold the injunction against Google. Thus the current state of the law in Canada is that non-party actors such as Google can be ordered by a Canadian court to take certain steps with worldwide effect, reaching outside Canada’s borders.

There are a number of fascinating elements to this case, which is why it has garnered so much attention and commentary. It’s worth emphasizing a few points from this controversial case:

1. Remember, Google was never a party to the original lawsuit. The search engine did nothing illegal or improper, nor was it implicated in the infringing conduct other than acting as a passive intermediary. However the Court noted that Google was so involved in facilitating the allegedly infringing behavior that the Court was justified in constraining Google’s activities in order to prevent the harmful conduct of the infringer. This, the Court said, is nothing new. Non-parties such as Google are often the subject of court orders.

2. Google had offered to block the search result listings from its < google.ca > site, but Equustek argued (and the Court agreed) that, to be effective, the order against Google had to be worldwide in effect. If restricted to Canada only, the order would not have the intended effect of preventing the irreparable harm to Equustek. “The Internet has no borders — its natural habitat is global,” said the Court. “The only way to ensure that the interlocutory injunction attained its objective was to have it apply where Google operates — globally. ”

However this ignores the fact that Equustek’s IP rights are not global in scope. Indeed, there was very little analysis of Equustek’s IP rights by any of the different levels of court, something noted by the dissent. Since this entire case involved pre-trial remedies, the merits of the underlying allegations and the strength of Equustek’s IP rights were never tested at trial. In order for the injunction to make sense, one must assumed that the IP rights were valid. Even so, Equustek’s rights couldn’t possibly be worldwide in nature. There was no evidence of any worldwide patent or trademark portfolio. So, the court somehow skipped from “the internet is borderless” to “the infringed rights are borderless” and are deserving of a worldwide remedy.

3. Lastly, Google raised a few other arguments – based on freedom of speech and international comity – that the Court batted away. Free speech, the Court argued, does not extend to protect the sale of articles that infringe IP rights. And as for international comity – the idea that each country should have mutual reciprocal respect for the laws of other countries in the international community, and that one law should not compel a person to break the laws of another country – the Court sidestepped this issue.  If there is any such offense to the principles of international comity, said the Court, then Google is free to apply again to the Canadian courts to vary the order accordingly. At the date of the hearing at the SCC, Google had made no such application. However, as soon as the ink had dried on the judgement, Google applied to Federal Court in California, its home jurisdiction, seeking relief from the reach of the SCC order. This request has been supported by a line-up of intervenors in the US blaring headlines such as “Top Canadian Court Permits Worldwide Internet Censorship“!

A copy of Google’s motion for relief in the US court is here.

With this maneuver, Google may be writing a rule-book on how to delimit or constrain the scope of the SCC’s reach by appealing to US courts. As between Canada and the US, this may help clarify the limits of how Canadian court orders will impact US persons. Let’s not forget that US courts don’t hesitate to make extraterritorial orders of their own. Other countries routinely do the same, so this is by no means a uniquely Canadian scenario.

I noted in January, 2016 that this case was one to watch, and in 2017 it remains true. We will monitor and report back on the results of Google’s US Federal Court action.

Calgary – 07:00 MST

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