The Court of Appeal for British Columbia (the Court of Appeal), in a decision involving allegations of counterfeit computer parts, recently upheld an interlocutory injunction prohibiting Google Inc. (Google) from including a foreign website in its search results.1 The Court of Appeal found it had jurisdiction over Google because Google carried on business in British Columbia, even though it did not have a physical presence in the province, since it collected data, offered search results and advertised in the province, and determined that an order with international effect was required to protect the plaintiffs' interests.
What You Need To Know
- Companies that operate over the Internet may be found to be "carrying on business" in Canada even if they do not have a physical presence in the country. This decision has ramifications for Internet infrastructure companies, and is also relevant to companies seeking redress for counterfeit goods/anti-competitive behaviour, when the defendant is beyond the reach of the Canadian courts.
- The court also ruled that its order against Google could be directed to international effect, because the business carried on in British Columbia by Google was an integrated part of Google's overall operations, and Google therefore had a connection to the province.
- While acknowledging that it is unusual for the courts to make orders against non-parties, the Court of Appeal stated that it is nonetheless a well-established principle of law that courts have the jurisdiction to grant injunctive relief against third parties as an ancillary means of preserving the plaintiff's rights. Going forward, this decision could both serve as a basis for a Canadian court to grant a remedy for a wider range of online activities, and have potential implications on contractual obligations of online providers.
- The court noted that any orders with international effect must consider "comity" (which is the recognition by a court of the laws and judicial decisions of another court). In this case, the Court of Appeal determined that an order that prevents the defendants from advertising wares in violation of the plaintiff's intellectual property rights is limited in scope and would not offend the "core values of any nation."
In the underlying litigation, the plaintiffs alleged that the defendants sold counterfeit network interface hardware2 that was designed and manufactured using unlawfully acquired confidential information and trade secrets. At the onset of litigation, the defendants' operations were based in Vancouver. As the litigation progressed, however, the defendants moved their operations to unknown locations, apparently outside of Canada. Despite the grant of a number of interlocutory orders, the defendants continued to carry on business unimpeded. In response to these orders, Google voluntarily blocked individual webpages from appearing in search results which originated from the google.ca domain. Despite this measure, the defendants continued to make sales to customers outside of Canada.
Unsatisfied with this arrangement, the plaintiffs applied for an interlocutory injunction requiring Google to restrict worldwide search results, regardless of which Google domain the search originated from. Google objected, arguing that the British Columbia Supreme Court lacked jurisdiction to make such an order because Google did not have a physical presence in British Columbia, and further, that it could not make an order directed to activities exclusively carried on outside of the province (i.e., extending to searches originating from Google domains other than google.ca).
The Court of Appeal upheld the order granted by the Supreme Court of British Columbia, confirming that it had sufficient jurisdiction over Google and also had jurisdiction to make an order with international effect. The Court of Appeal took in personam jurisdiction over Google because Google carried on business in British Columbia (by collecting data and offering search results and advertising), and determined that the international order was required to protect the plaintiffs' interests. The Court of Appeal also noted that orders with international effect have been made by courts in other countries in the context of preventing "Internet abuses."
This decision is of particular interest to online businesses and Internet infrastructure companies (including service providers, cloud providers, and social networks). While this situation involved the removal of a website from indexed search results, it is possible that this action could have implications on contractual obligations of the online provider. Furthermore, this case could be used as a basis for a Canadian court to grant a remedy for a wider range of online activities.
Although the Court of Appeal recognized that orders with international scope should be made with caution, and have attracted controversy in other jurisdictions, this ruling nonetheless signals that Canadian courts are willing to make orders with intentionally international effect, even against third parties to litigation. It remains to be seen how the balance between plaintiff rights and jurisdictional restraint will be applied in future decisions involving businesses operating over the Internet without bricks-and-mortars ties to Canada.
1 Equustek Solutions Inc. v. Google Inc., 2015 BCCA 265.
2 The computer hardware component that allows a computer to connect to a network.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.