On June 28, 2017, the Supreme Court of Canada released its long-awaited decision in the case of Google Inc. v. Equustek Solutions Inc. The case is important as it affirms the authority of Canadian courts to issue worldwide injunctions against companies operating online, greatly expanding the power of Canadian courts in the process. However, by granting an injunction in these circumstances, the Court may also have opened the door to a number of concerns which will be of interest to companies doing business in Canada and abroad.
Facts and Decision
The case stems from a claim by Equustek Solutions Inc. (“Equustek”), a Canadian company, that one of its distributors (“Datalink”) had relabelled an Equustek product and passed it off as their own, and had used Equustek’s confidential information to produce a competing product.
In an attempt to stop Datalink from continuing to sell its allegedly counterfeit product, Equustek approached Google and requested that it remove Datalink’s websites from Google’s search results. Google complied with the request, but only with respect to Datalink’s google.ca domain. Equustek found this to be insufficient, as the majority of sales of the infringing product occurred outside of Canada. As a result, in 2014, Equustek sought an interlocutory injunction preventing Google from displaying any part of Datalink’s websites on any of its search results worldwide. The injunction was granted by the British Columbia Superior Court, affirmed by the British Columbia Court of Appeal, and appealed to the Supreme Court of Canada.
The issues for the Supreme Court to consider in this case were: (1) did the Court have jurisdiction to grant the injunction; and (2) if it did, was it just and equitable to do so in this case? Justice Abella, writing for a majority of the Court found that Canadian courts do have the authority to issue worldwide injunctions, and that granting one in this case was necessary to ensure that the injunction achieved its intended effect of preventing irreparable harm to Equustek pending a trial.
Injunctions and Non-Parties
The Court first considered whether it had jurisdiction to order an injunction against Google, who was not a party to the litigation. The Court found (and rightly so) that in light of the jurisprudence it did have authority to order an injunction impacting non-parties. But the more important question facing the Court was whether it should do so in this case. The Court decided that it should.
The Court’s reasoning was that Google, by displaying search results pointing to the Defendant, was facilitating its allegedly illegal activities. However, this turns on a very broad notion of what it means to “facilitate” an activity, and as the dissent pointed out, granting an order of this nature expands the scope of who can be targeted by such an order to an extent that is disturbingly broad. As the dissent notes, on the basis of this decision, “facilitating” parties could potentially include suppliers of raw materials or even the power company the delivers power to a defendant’s physical address.
Certainly removing references to the Datalink’s websites would make the intended remedy more effective, as would shutting down its supply lines or cutting the power to its registered address. However, doing so clearly seems excessive, particularly given the fact that none of the allegations of the plaintiff had yet been proven. Furthermore, targeting such remote elements of the defendant’s business could not only be burdensome to the affected non-parties, but could cause irreparable harm to the defendant, a factor that was overlooked by the Court.
Having established that it could impose an injunction on Google, the Court then considered whether it had jurisdiction to order an injunction on a worldwide basis. Again, the Court determined that based on the jurisprudence, and the effect of other analogous orders (such as Mareva injunctions), the Court did have authority to issue such an order. And again, the Court decided that it should do so in the circumstances. The Court supported its decision by suggesting that because Google operates on an international basis, the injunction must apply worldwide in order to have its desired effect.
Unfortunately, due to the Court’s focus on granting an effective remedy to Equustek, it overlooked some important long-term effects that such an order may produce. One such effect is the potential risk that by granting a worldwide injunction on the facts of this case, the Court may have created the conditions for a flood of interlocutory injunctions against search providers and other online intermediaries in Canadian courts. Furthermore, given the fact that the injunction was ordered without the plaintiff having proven the alleged infringement, there is little to prevent a party from seeking a worldwide injunction on the basis of false or predatory claims to serve its own purposes. As an example, following this decision a company with a large intellectual property portfolio may be motivated to file frivolous claims and seek interlocutory injunctions to remove competing products from the online marketplace without having to prove infringement at trial, effectively forcing smaller competitors out of the market.
To further frustrate matters, as the dissent points out, granting such an injunction effectively eliminates any potential benefit to the plaintiff of proceeding to trial, meaning this order, though temporary in form, may be final in substance. This is not to say that such an order could not be varied or vacated by the defendant, but by that time the damage may be done, or the defendant’s funds exhausted, rendering it unable to proceed to trial to defend against the false claims.
The Court in this case granted an injunction against Google in order to ensure an effective remedy for the plaintiff. However, by placing so much focus on the compelling circumstances of the plaintiff, the Court created a precedent that may lead to a flood of interlocutory injunctions in Canadian courts, without including adequate protections to ensure this powerful remedy is not used to further false or abusive claims.
As mentioned above, much of the Court’s focus in this decision was on ensuring that the injunction sought had the desired effect of preventing the irreparable harm being caused to the plaintiff through the sale of the allegedly infringing goods. Yet, despite the fact that the Court granted such an expansive order, the order granted has no realistic prospect of truly preventing harm to the plaintiff. The most it can do, is reduce the harm being done to some extent.
The Equustek case was brought about in part because, from a practical standpoint, any Google user can easily switch between the google.ca domain and other Google domains, rendering the removal of websites from the google.ca domain alone, ineffective. Yet, in this case, the Court has granted an injunction which results in that very same limitation. The Court did not consider the fact that users could just as easily navigate to any other online search engine to achieve a very similar, if not identical, search result.
The Court also overlooked the fact that alternative means existed to enforce the previous order granted. As the dissent mentions, Datalink was shown to have assets in France. Therefore, a potentially effective alternative would be to bring proceedings in France. Alternatively, Equustek could seek an injunction against the internet service provider that is hosting Datalink’s websites, which would have the capacity to actually shut down a website from the source. Either of these means seem more closely connected to, and more likely to be effective than, seeking an order to remove Google search results of Datalink’s websites.
Despite the fact that the Court in this case granted such a far-reaching order with the intent of granting an effective remedy to the plaintiff, it failed to consider that regardless of the scope or reach of the remedy, in the circumstances it would not be effective anyway. Furthermore, its dedication to securing an effective remedy for the plaintiff may have caused the Court to unwittingly pave the way for overly broad, frivolous and predatory uses of injunctions in the future.
That said, given the strength of the dissent, and the various issues that were overlooked or too quickly dispensed with by the majority of the Court, it could well be that this case is not the last word on these complex issues.
This article is for informational purposes only and does not constitute legal advice. If you wish to discuss your issue with a lawyer, contact Martin today. 613-747-2459 ext.308, [email protected]