Google Inc v Equustek Solutions Inc, 2017 SCC 34

When non-parties, despite not being involved in an underlying lawsuit or being guilty of wrongdoing, are so entangled in the wrongful acts of others that they facilitate the harm, they may still be subject to interlocutory injunctions – including worldwide ones.

In this decision, the Supreme Court of Canada (“SCC”) dismissed [54] Google Inc.’s (“Google”) appeal and upheld the worldwide interlocutory injunction against it. [21] The underlying dispute in this decision was between Equustek Solutions Inc. (“Equustek”), a small tech company in BC, [1] and Morgan Jack, Datalink Technology Gateways Inc. and Datalink Technologies Gateways LLC (collectively, “Datalink”), which had begun re-branding and passing off one of Equustek’s products as its own. [3] Google had ultimately been ordered to de-index all of Datalink’s websites, [19] which it appealed in this decision.

Background

Equustek had previously brought action against Datalink, claiming that Datalink, while acting in the capacity of a distributor of Equustek’s products, had begun passing off one of the products as its own. [3] Datalink also used Equustek’s trade secrets to create a competing product. [3] Datalink eventually abandoned the proceedings and left BC, [7] but continued to carry on its business, selling the disputed products all over the world via its websites despite court orders. [11] Equustek requested Google that it remove Datalink’s websites, which Google refused. [12] Following court proceedings by Equustek, seeking an order requiring Google comply with its request, Google asked Equustek to obtain a court order prohibiting Datalink from carrying on business on the Internet. [13]

The Supreme Court of British Columbia (“SCBC”) issued an injunction ordering Datalink to “cease operating or carrying on business through any website.” [14] Google notified Equustek, between late 2012 and early 2013, that 345 webpages associated with Datalink had been de-indexed. [14] However, these were not all of Datalink’s websites. [15] Datalink was therefore able to evade the court orders by moving the unlawful elements to new pages on its websites. [15] In addition, the de‑indexing performed by Google was only for searches conducted on the domain Google.ca. [16] Equustek was then able to obtain an interlocutory injunction to prevent Google from listing any of Datalink’s websites on any of its search results worldwide. [17] Google’s appeal was dismissed by the Court of Appeal for British Columbia (“CABC”). [20]

Interlocutory Injunctions and Google’s Arguments

The SCC began its analysis by stating that decisions to grant interlocutory injunctions are discretionary and attract high degrees of deference. [22] As equitable remedies, [23] interlocutory injunctions seek to ensure that the subject matter of the dispute is “preserved” so that effective relief is available when the case is heard on the merits, [24] and that their character as “interlocutory” is independent of their duration pending trial. [24]

RJR-MacDonald v Canada (Attorney General), [1994] 1 SCR 311 provides the three-part test for determining whether the court should exercise its discretion to grant an interlocutory injunction: whether there is a serious issue to be tried, would the person applying for the injunction suffer irreparable harm if the injunction were not granted, and is the balance of convenience in favour of granting the interlocutory injunction or denying it. [25] However, the main question is ultimately whether granting the injunction is just and equitable, considering the circumstances of the case. [25]

Google neither disputed that there was a serious issue to be tried, nor that Equustek was suffering irreparable harm which Google was facilitating by proxy through its search engine. [26] Additionally, Google did not suggest that it would be inconvenienced in any material way, or that it would incur any significant expense, by de‑indexing Datalink’s websites. [50] From Google’s viewpoint, the injunction would neither be necessary to prevent irreparable harm to Equustek nor would it be effective. [27] It presented three arguments in support of this, namely, that as a non‑party it should be exempt from the injunction, that there was no necessity for the extraterritorial reach of the order, and that there were freedom of expression aspects that should have favoured not granting the order. [27]

The SCC’s Reasoning and Dismissal

The SCC found that injunctive relief can be ordered against someone who is not a party to the underlying lawsuit [28] in that, when non‑parties are so involved in the wrongful acts of others that they facilitate the harm, despite not being guilty of wrongdoing, they may be subject to interlocutory injunctions. [31] It was clear to all that Datalink would be unable to viably carry on business without its websites appearing on Google searches. [34] The injunction in this case flowed from the necessity of Google’s assistance to prevent Datalink from defying court orders and causing irreparable harm to Equustek. [35] Absent the injunctive relief, Google would continue to facilitate that harm. [35]

When it is necessary to ensure an injunction’s effectiveness, a court may grant a worldwide injunction. [38] The SCC stated that the Internet has no borders, which allows for the problem in this case to persist globally. [41] Hence, the interlocutory injunction would likewise have to apply globally. [41] An injunction restricted only to Canada or to the domain Google.ca, would deprive the remedy of its intended scope and ability to prevent irreparable harm. [41]

Google’s argument that a global injunction would violate international considerations was deemed to be only theoretical. [44] Google was invited to present any evidence to the British Columbia courts to vary the interlocutory order, showing that complying with such an injunction would require it to violate the laws of another jurisdiction. [46] Absent any such evidence, and given Google’s right to seek a variation, it was not found to be equitable to deny Equustek the international scope it required to ensure an effective remedy. [47]

Given that Datalink had ignored all previous court orders made against it and left the jurisdiction, but continued to operate its business from unknown locations outside Canada, [52] its survival would be at the expense of Equustek’s survival, via Google’s search engine. [52] This made Google sufficiently important in allowing the harm to occur. [53] Thus, the SCC found that the worldwide injunction would be the only effective way to mitigate the harm to Equustek as well as the only way to protect Equustek while the root litigation was resolved. [53] The harm to Google in carrying this out was found to be minimal at most. [53]

The appeal was dismissed and the worldwide interlocutory injunction against Google was upheld. [54]

Dissent

Two dissenting judges believed that while the SCBC had jurisdiction to issue the injunctive order against Google, it should instead have exercised judicial restraint. [55] They provided five factors in consideration of this, namely, that the effect of the order would be final, [61-67] that Google was a non-party, [68-74] that the order would be mandatory, [75, 76] that the order was not shown to be effective, [77-80] and that alternative options were available. [81]

Commentary

An aspect of note in this decision is the extraterritorial nature of the SCC’s holding, an ideology which has recently seen some limelight in the IP arena. For example, in the recent decision of Douez v Facebook, Inc, 2017 SCC 33, the SCC found a clause unenforceable because it stated that any disputes must be resolved in California, under Californian law. As discussed in the current decision, the Internet is a global entity, and is indiscriminate of where users connect from. While this comes with many positive attributes, it can however also allow for infringers to circumvent jurisdiction-specific IP laws and court orders by simply relocating and resuming the infringing activities. Extraterritorial, pro-IP decisions such as this may seek to reconcile the disconnect that exists between the borders of nations and the boundless expanse of the Internet.