Court of Appeal Decision of the Week

Court OKs Worldwide Order Against Google

Case: Equustek Solutions Inc. v Google Inc., 2015 BCCA 265 

Keywords: Court jurisdiction, territorial competence, comity, injunction, jurisdiction over a non-party

Synopsis: Equustek Solutions Inc. (plaintiffs) alleged Datalink Technologies Gateways Inc. (defendants) designed and sold counterfeit versions of their product. They sued for trademark infringement and unlawful appropriation of trade secrets, and obtained injunctions prohibiting the defendants from carrying on their business. The defendants continued to carry on business, but did so in a clandestine manner using a variety of websites, and relying on web search engines to direct customers to those sites. The plaintiffs successfully applied to the B.C.S.C. for an interlocutory injunction prohibiting Google from delivering search results pointing to the defendants’ websites. Google appealed, arguing: (i) the injunction was beyond the jurisdiction of the court; (ii) it improperly operated against an innocent non-party to the litigation; (iii) it had an impermissible extraterritorial reach and violated the principle of comity; and (iv) it should not have been granted because of its effect on freedom of speech.

The B.C.C.A. (in a decision written by Justice Groberman) dismissed the appeal, holding that territorial competence over the action between the plaintiffs and defendants was sufficient to establish territorial competence over the injunction application. The Court of Appeal found that even though Google did not have resident employees, business offices, or servers in British Columbia, its activities in gathering data, in distributing targeted advertising to users in British Columbia, and in selling advertising to British Columbia businesses was sufficient to uphold the chambers judge’s finding that it does business in B.C. The court, therefore, had in personam jurisdiction over Google. As such, it was permissible to seek relief against Google, even though it was not a party to the litigation. The injunction did not violate principles of comity.

Importance: In concluding that the court below had in personam jurisdiction over Google, Justice Groberman agreed with the chambers judge’s conclusion that the active process of obtaining data that resides in the province or is the property of individuals in British Columbia was a key part of Google’s business. He also dismissed the threat of multi-jurisdictional control over Google’s operations given that courts must exercise considerable restraint in granting remedies that have international ramifications.

With respect to the issue of Google being a non-party to the underlying litigation, Justice Groberman acknowledged it is unusual for courts to grant remedies against persons who are not parties to an action. But he also noted that courts are not powerless to make orders against non-parties, and routinely do so (e.g. subpoenas to witnesses, summonses for jury duty, and garnishing orders).

Justice Groberman cited the Supreme Court of Canada’s decision in Brotherhood of Maintenance of Way Employees Canadian Pacific System Federation v Canadian Pacific Ltd., [1996] 2 SCR 495 where it was held Canadian courts have jurisdiction to grant injunctions in cases where there is a justiciable right, even if the court is not, itself, the forum where the right will be determined. He also cited the SCC judgment in MacMillan Bloedel Ltd. v Simpson, [1996] 2 SCR 1048 where the Court held “…that both English and Canadian authorities support the view that non-parties are bound by injunctions” and that “if non-parties violate injunctions, they are subject to conviction and punishment for contempt of court.”

Turning to the issue of extraterritorial effect and comity, the Court of Appeal found that courts may have in personam jurisdiction over non-residents in a variety of situations. Further, once it is accepted that a court has in personam jurisdiction over a person, the fact that its order may affect activities in other jurisdictions is not a bar to it making an order. Justice Groberman cited a number of cases supporting this legal principle (British Columbia v Shah (1989), [1991] BCJ No. 3994, where the Supreme Court of British Columbia issued its first worldwide injunction; Mooney v Orr (1994), 98 BCLR (2d) 318; and Minera Aquiline Argentina SA v IMA Exploration Inc., 2007 BCCA 319). Further, while issues of comity and enforceability are concerns that must be taken into account, they do not result in a simple rule that the activities of non-residents in foreign jurisdictions cannot be affected by orders of Canadian courts.

Regarding freedom of expression, the Court of Appeal held there was no realistic assertion the trial judge’s order would offend the sensibilities of any other nation. At trial, it was not suggested the order prohibiting the defendants from advertising wares that violate the intellectual property rights of the plaintiffs could offend the core values of any nation. In the unlikely event that any jurisdiction finds the order offensive to its core values, an application could be made to modify the order so as to avoid the problem.

Given the above findings, the Court of Appeal then applied the test for granting an interlocutory injunction as set out in RJR Macdonald Inc. v Canada (Attorney General), [1994] 1 SCR 311. Specifically, the applicant must demonstrate:

  • That there is a serious question to be tried;
  • That it will suffer irreparable harm if the injunction is not granted; and
  • That the balance of convenience favours the granting of the injunction.

The Court of Appeal found that the first two criteria were easily met and ultimately sided with the chambers judge’s decision on the third criteria – namely, that the injunction would not inconvenience Google in any material way and that Google would not incur expense in complying with it. The Court of Appeal also found that the plaintiffs had established that an order limited to the google.ca search site would not be effective and that there was a basis for giving the injunction worldwide effect.

Finally, Justice Groberman dismissed the argument that the defendants might wish to use their websites for legitimate free speech rather than for unlawful marketing purposes – finding the possibility to be “entirely speculative.” The Court of Appeal noted that if the character of the websites changes, it is always open to the defendants to seek a variation of the injunction. It unanimously dismissed Google’s appeal.

This case is noteworthy for its possible precedent-setting effect, particularly in regards to enforcing injunctions against internet-based companies with a global reach. Further, the decision raises unique issues about jurisdiction for internet-based companies and the power Canadian courts have over the internet. Some commentators believe Google may seek leave to appeal to the Supreme Court of Canada given the impact of this decision on its business practices and implications for future litigation against the search engine provider.

Counsel for the Respondent (Plaintiffs) Equustek Solutions Inc.: Robert Fleming and John Zeljkovich (Robert Samuel Fleming Law Corp., Vancouver)

Counsel for the Respondent (Defendants): No counsel appeared

Counsel for the Appellant: Stephen Schachter, Q.C. and Geoffrey Gomery, Q.C. (Nathanson Schachter & Thompson LLP, Vancouver) and James Bunting (Davies Ward Phillips & Vineberg LLP, Toronto)

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(Thanks to our summer student Neil Kennedy for his assistance in preparing this summary.)

Posted: Wednesday, June 17, 2015