On 28 June 2017, the Supreme Court of Canada handed down judgment in the controversial case of Google Inc v Equustek Solutions (2017 SCC 34) dismissing (7:2) Google’s appeal against a worldwide injunction ordering it to remove websites from search results (2014 BCSC 1063). The result of this decision is that worldwide injunction against Google remains in place.
Background
The background is set out in our post on the first instance decision. In short the plaintiffs (“Equustek”) claimed that the defendants (“Datalink”), designed and sold counterfeit versions of their product and sued for trademark infringement and unlawful appropriation of trade secrets.
Equustek obtained injunctions prohibiting Datalink from carrying on their business. Datalink continued the business in a clandestine manner using a variety of websites, and relying on web search engines to direct customers to those sites.
Equustek said it faced a game of “whack-a-mole” – Datalink having effectively abandoned defence of the claim, but continuing to sell counterfeit product on its websites. Every time that Google blocked access to a specific webpage, the defendants would move the content to a new webpage within their site.
Equustek successfully applied to the Chambers Judge in the Supreme Court of British Columbia for an injunction prohibiting Google from delivering search results pointing to the defendants’ websites. Google’s appeal to the Court of Appeal of British Columbia was dismissed in June 2015 (2015 BCCA 265).
Google appealed to the Supreme Court. It submitted that the global reach of the order obtained by Equustek was not necessary to prevent irreparable harm and was not effective. In addition, Google argued that as a non‑party it should be immune from the injunction; that there is no necessity for the extraterritorial reach of the order; and that there are freedom of expression concerns that should have tipped the balance against granting the order.
On the appeal there were more than 33 interveners, four of which made oral submissions. The “Factums” (written submissions) of the parties and the interveners can be found here. The case was heard on 6 December 2016 and there is a webcast of the hearing. It should be noted that the Supreme Court of Canada is beacon of transparency in providing all these materials and provides an example to be emulated by other apex courts.
Judgment
Introduction
The judgment of the majority (McLachlin CJ, Abella, Moldaver, Karakatsanis, Wagner, Gascon and Brown JJJ) was given by Abella J. The issue was framed as being
“whether Google can be ordered, pending 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.” [1]
Abella J began by noting that the decision to grant an interlocutory injunction is discretionary and entitled to a high degree of deference. In this case there was no reason to interfere [22] . She then considered two substantive issues: the jurisdiction to grant orders against non-parties and the question of “extra territorial effect”.
Injunctions against non-parties
It is clear that non-parties can be the subject of interlocutory injunctions. Abella J held that the Norwich Pharmacal jurisdiction supplied a principled rationale for granting injunctions against non-parties who facilitate wrongdoing [31]. Reliance was placed on the English case of Cartier International AG v. British Sky Broadcasting Ltd [2017] 1 All ER 700 [32].
On this issue Abella J concluded
“Much like a Norwich order or a Mareva injunction against a non-party, the interlocutory injunction in this case flows from the necessity of Google’s assistance in order to prevent the facilitation of Datalink’s ability to defy court orders and do irreparable harm to Equustek. Without the injunctive relief, it was clear that Google would continue to facilitate that ongoing harm. [35]
Extraterritorial effect
Google’s argument that it was improper to grant an interlocutory injunction with extraterritorial effect was also rejected.
The Judge’s finding that there was in personam jurisdiction over Google as a result of its carrying on business in British Columbia through advertising and search operation was not challenged [37]. As a result, the Court had jurisdiction to grant an injunction enjoining conduct anywhere in the world [38].
Abella J agreed with the Judge’s conclusion that, in order to ensure that Google did not facilitate Datalink’s breach of court orders the injunction had to have worldwide effect [41].
“The interlocutory injunction in this case is necessary to prevent the irreparable harm that flows from Datalink carrying on business on the Internet, a business which would be commercially impossible without Google’s facilitation. The order targets Datalink’s websites — the list of which has been updated as Datalink has sought to thwart the injunction — and prevents them from being displayed where they do the most harm: on Google’s global search results”. [42]
Google’s argument that a global injunction violates international comity because it is possible that, complying with it would result in it violating the laws of that jurisdiction was theoretical [44].
If Google had evidence that complying with an injunction would require it to violate laws of another jurisdiction it could apply to the British Columbia courts to vary the order [46]
Abella J said
This is not an order to remove speech that, on its face, engages freedom of expression values, it is an order to de-index websites that are in violation of several court orders. We have not, to date, accepted that freedom of expression requires the facilitation of the unlawful sale of goods. [48]
Google did not suggest that it would be inconvenienced in any material way or would incur any significant expense. It acknowledged that it can, and often does, exactly what is being asked of it. It avoids generating links to child pornography and websites containing “hate speech” [56]
The fact that the interlocutory injunction was likely to be permanent did not prevent it from being taken at face value. Google could always apply to have the injunction varied or vacated [51].
Dissenting Judgment
Côté and Rowe JJ dissented. In their view the order was, in effect, a final determination of the action and did not meet the test for a permanent injunction.
The order was mandatory in effect and required ongoing supervision. It had been effective in making Datalink cease operating through any website. In any event, there were alternative remedies available to the plaintiff.
Comment
Introduction
We have previously published comments on the first instance decision and that of the Court of Appeal. These decisions have now been upheld by the Supreme Court. This appears to be the first time that the highest court in a common law jurisdiction has considered an order against Google and has considered the more general implications of a “worldwide” injunction.
It is difficult to disagree with the premises of the Court’s judgment namely that it there is in personam jurisdiction to make worldwide orders against Google (for the English position see eg Re J [2013] EWHC 2694 (Fam) [44] to [56]) and that the Court has power to grant injunctions against non-parties who “facilitate wrongdoing”. The basic point is that Google engages in e-commerce in British Columbia and must, ultimately, comply with local laws. On this basis, there is a strong argument that the decision is correct.
There are, however, two issues, which merit wider consideration: the “floodgates” argument and the issue as to the true nature of the order.
Floodgates
Like the decisions of the lower courts in this case the Supreme Court’s judgment has attracted considerable criticism based on “floodgates” arguments. The perceived problem is the worldwide nature of the order. It is suggested that the decision invites courts around the world to issue global takedown orders. For example, EFF argues it will “embolden other countries to try to enforce their own speech-restricting laws on the internet“.
However, as I pointed out at the time of the first instance decision, the risks of courts in countries such as China or Iran making such orders already exist – and will continue to do so whatever Canadian courts decide. The Canadian courts had to decide whether Equustek was entitled to a remedy and, if so, what the most effective form of that remedy would be. It is difficult to see why they should refuse such a remedy on the basis that, in the future, other courts in other cases and other jurisdictions might make similar orders which are unjustified.
In addition, it is argued by commentators such as Michael Geist that the practical effect of the decision is that those seeking global takedown orders do not need to canvass the laws in other countries to consider the potential for conflicts with their request. In doing so, it places the obligation on intermediaries such as Google and increases the likelihood that those companies will pick and choose among the orders they are willing to follow. This is correct but the alternative is that a claimant would have to launch legal actions around the world in order to provide effective protection for their rights. The Court, understandably, decided that the better approach was to make the worldwide order against Google and place the onus for raising issues concerning local law on them. The position might, of course, be different if different entities were involved.
The Courts of many jurisdictions have been grappling with the issue of how to regulate illegality on the internet . Although corporations such as Google are, understandably, concerned about the impact of “worldwide orders” of the kind made in this case, it is inevitable that, as an international business they will have to submit to the laws of the jurisdictions in which they operate.
True Nature of the Order
The original order was granted on 13 June 2014 in an action which had commenced in 2011. In 2012 Equustek was given leave to apply for default judgment but has not done so. It seems unlikely that Equustek’s action will ever go to trial. As a result, the order against Google (which has already been in place for 3 years) is likely to be indefinite. These considerations led the dissenting judges to treat it as being, in substance, a permanent injunction [64].
Abella J, in effect, ducked this issue by saying that the injunction remained, in substance, interlocutory and it was always open to Google to apply to discharge it on the basis it has been in force an inordinate time ([51]).
It is unlikely that an English Court would permit this situation to continue: interim orders are often “time limited” and the claimant is required to take steps to bring the matter on for trial. The Courts may take steps to require parties to explain why an action in which an interim injunction was made has not been progressed to trial (see JIH v NGN (No.2) [2012] EWHC 2179 (QB)). There is some English authority to the effect that an interim injunction automatically ceases to have “Spycatcher” effect if it becomes clear that there is no longer going to be a trial.
Behind the question as to whether the order is interlocutory or permanent lies a deeper issue. The order against Google was treated as being analogous to a “freezing order” designed to “ensure that the subject matter of the litigation will be “preserved” so that effective relief will be available when the case is ultimately heard on the merits“. This obviously no longer applies once a final order is made against the defendant: there is no longer a “subject matter” to preserve. It was accepted that Equustek had no cause of action against Google and the case proceeded on the assumption that no “final order” could be made against a third party.
It is, however, arguable that a final order could be made in the same form as the interlocutory order which was the subject of the appeal. The Courts have an unlimited jurisdiction to grant injunctions, it is not necessary to have a cause of action (see generally, Cartier International AG v British Sky Broadcasting Ltd [2017] 1 All ER 700). There seems no reason, in principle, why a final order should not be made against a third party which is found to be facilitating continuing wrongdoing by a defendant.
Conclusion
This decision is a controversial one which is likely to be the subject of considerable comment and discussion. Although I do not share her view that the decision is “ominous” and “deeply troubling”, it is nevertheless difficult to disagree with Daphne Keller’s conclusion that the issues which arise require “engagement from … institutions of government, and a larger dialog about national laws and global information access”. As the internet becomes ever more important to the global economy, the issue as to how it can be regulated by national law become more pressing.
Hugh Tomlinson QC is a specialist in media and information law at Matrix Chambers and an editor of Inforrm.
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