Google Inc.’s Fight Against a Worldwide Injunction on Search Results Continues

The Supreme Court of Canada’s landmark decision in Google Inc v Equustek Solutions Inc[1] upheld an interlocutory injunction against Google, a non-party to the underlying litigation, to globally de-index the websites of the defendant that is infringing the intellectual property of the plaintiff through the defendant’s websites. In response to that decision, Google obtained a judgment from a US court declaring that the decision was not enforceable in the US, and attempted unsuccessfully to have the original injunction overturned in Canada on the basis of the US judgment.

Background

The plaintiff, Equustek Solutions Inc. (“Equustek”), brought an action against Datalink Technology Gateways Inc. and Datalink Technologies Gateways LLC (“Datalink”) in April 2011, claiming that Datalink, while acting as a distributor of Equustek’s products, relabeled a product of Equustek and passed it off as its own. Equustek also alleged that Datalink acquired confidential information and trade secrets that belonged to Equustek, and used that information and trade secrets to create and sell a competing product. As a result, Equustek terminated its relationship with Datalink, and demanded that Datalink delete all references to Equustek’s products and trademarks on its websites.[2]

In September 2011, a British Columbia (“BC”) court granted an injunction ordering Datalink to return source code and documents that belonged to Equustek, and to provide Equustek with a customer list of those who had ordered an Equustek product from Datalink. The injunction also ordered Datalink to post a statement on its website informing customers that Datalink was no longer a distributor of Equustek’s products, and to direct customers to Equustek’s website.[3] Datalink abandoned the proceedings and left BC without producing any documents or complying with any of the orders.[4] In July 2012, the BC court granted a Mareva injunction freezing Datalink’s worldwide assets, including its entire product inventory.[5] In August 2012, Equustek was granted another interlocutory injunction that prohibited Datalink from dealing with Equustek’s intellectual property, such as “documents and information at the heat of any business of a kind engaged in by both parties”.[6] In September 2012, a warrant was issued (and remains outstanding) for Datalink’s principal, Morgan Jack, who was found in contempt.[7]

Despite the various court orders against it, Datalink continues to sell Equustek’s products on its website to customers “all over the world” from an unknown location.[8] In an effort to prevent continued damages, Equustek approached Google in September 2012 and requested assistance in de-indexing Datalink’s websites. Google refused the request.[9]

British Columbia Supreme Court

In December 2012, at the request of Google, Equustek obtained an injunction ordering Datalink to “cease operating or carrying on business through any website”. As a result of that order, Google de-indexed 345 individual webpages associated with Datalink, but did not de-index all of Datalink’s websites.[10] This approach to de-indexing was not effective because Datalink moved the content of the de-indexed pages to new pages within its websites, thereby circumventing the court orders.[11]

As a result, in 2014, Equustek sought an interlocutory injunction to enjoin Google from displaying any part of the Datalink websites in its search results worldwide.[12] The BC Supreme Court (“BCSC”) granted the interlocutory injunction, finding that irreparable harm to Equustek was being facilitated through Google’s search engine, and that enjoining Google was the only way to protect Equustek by preventing potential customers from accessing the Datalink websites.[13] The BCSC also concluded that the injunction could only be effective if the Datalink websites were blocked on all of Google’s websites, not just on google.ca.[14]

British Columbia Court of Appeal

Google’s appeal of the interlocutory injunction to the BC Court of Appeal (“BCCA”) was unsuccessful. In upholding the injunction, the BCCA found that the BCSC had in personam and territorial jurisdiction over Google, since Google carried on business in BC through its advertising and search operations. The BCSC could therefore make an order with extraterritorial effect.[15]

Supreme Court of Canada

Google was granted leave to appeal the BCCA decision to the Supreme Court of Canada (“SCC”) on the basis that the injunction was neither necessary nor effective to prevent the irreparable harm suffered by Equustek. Google also argued that as a non-party, it should be immune from the injunction.[16]

The majority of the SCC agreed with the BC courts and upheld the injunction.[17] The SCC 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”.[18] The SCC found that an interlocutory injunction against Google was the “only effective way to mitigate the harm to Equustek”, which outweighed the minimal to non-existent harm suffered by Google.[19]

The SCC also disagreed with Google and held that injunctions can be ordered against a non-party to a lawsuit, as the interlocutory injunction in this case flowed 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”.[20]

United States District Court

Following the SCC decision, Google commenced proceedings in the US District Court for Northern California, in which it sought “a declaratory judgement that the Canadian court’s order cannot be enforced in the United States and an order enjoining that enforcement”.[21] The US District Court granted Google’s motion for a preliminary injunction after considering (1) Google’s likelihood of success, (2) Google’s likelihood of suffering irreparable harm, (3) the balance of equities, and (4) the public interest. It based its decision primarily on the grounds that Section 230 of the US Communications Decency Act provides immunity to internet service providers that link to third-party websites.[22] The US District Court held that the enforcement of the Canadian order “undermines the policy goals of Section 230 and threatens free speech on the global internet”.[23] This Court subsequently granted a permanent injunction on December 14, 2017.

British Columbia Supreme Court Revisited

After obtaining the favourable US judgement, Google applied to the BCSC to have the 2014 injunction varied or set aside.[24] Google based its application on the comments found in the BCCA and SCC decisions, which left room for Google to vary the injunction if it could demonstrate that “another jurisdiction felt the injunction negatively impacted core values of freedom of expression or comity”.[25]

Google’s application was dismissed on April 16, 2018.[26] The BCSC articulated the test for reconsidering an interlocutory injunction as follows: “Where an interlocutory or interim injunction has been issued on the basis of evidence and full argument, it may be varied only where the evidence establishes a material change in the facts or circumstances that gave rise to the original order. That reconsideration has been described as an extraordinary measure on which the applicant bears a heavy burden.”[27] The BCSC went on to find that it was not open to it to revisit all issues relating to extra‑territoriality and judicial comity that were before all three levels of court in the prior proceedings.[28] Although the SCC noted that Google could apply to vary the injunction on the basis of evidence that the injunction would require it to violate the laws of another jurisdiction, including interfering with freedom of expression, the BCSC concluded that the US District Court decision did not establish that the injunction required Google to violate American law and did not restrict the BCSC’s ability to protect the integrity of its own process through orders directed to parties over whim it had personal jurisdiction.[29]

The BCSC further considered other changes in circumstances put forward by Google in its application and concluded that they were either more appropriate for the trial judge or not sufficiently material to warrant variance of the interlocutory injunction.[30]

Significance

The above decisions possibly provide Canadians with a remedy that transcends borders for harms that occur within the domain of the Internet. “The power to make orders against search engines is essential to preserving the effectiveness of law online, including to address the gamut of illegal online activities... Obtaining a remedy against a search engine is often the only practical solution to enforcing rights”.[31] These decisions also demonstrate that the “…natural evolution of courts’ inherent powers, are common worldwide, and can balance the interests of claimants, search engines and the public”.[32] The breadth of these rulings appears to have survived the US District Court decision, but the extent to which Canadian courts can rein in multi-national technology giants abroad remains to be seen.