Canada: What Role Should Canada's Courts Play When It Comes To Regulating Internet Activities? The Supreme Court Of Canada To Provide Much Needed Clarification

The Supreme Court of Canada has agreed to hear two fascinating cases that deal with jurisdictional questions arising from the activities of parties on the internet.

As Canadian individuals and businesses engage in more and more conduct over the internet, often with parties that do not have physical locations in Canada, there is increasing uncertainty over the remedies available to Canadians who are harmed by the conduct of parties with whom they engage online. The upcoming Supreme Court of Canada decisions will help clarify the role that Canadian courts intend to play in enforcing Canadian laws and protecting Canadians from harmful online business practices.

  • Scenario I (Equustek Solutions Inc. v. Google Inc.): A competitor has stolen your intellectual property, is illegally manufacturing a competing product, and relies on search engine results to target customers. When Google voluntarily removes the competitor's 345 URLs from search results from (but not Google sites in other countries), the competitor simply creates new web pages with different URLs, in what becomes a game of 'whack-a-mole.' Customers in non-Canadian jurisdictions are still able to see the search results of your competitor. Google has no physical presence in your province. Can a Canadian court in your province order Google to block search results outside of Canada's borders and finally give you an adequate solution to the problems caused by your competitor's repeated breach of your intellectual property rights?

Current Status: The British Columbia (B.C.) Court of Appeal granted a worldwide injunction requiring Google to block certain infringing websites from its search results. In spite of the fact that Google has no physical presence in B.C., the B.C. Court of Appeal held that it had jurisdiction over Google.

  • Scenario II (Douez v. Facebook, Inc.): Facebook has allegedly used your name and photo without your consent, and you believe your rights under your province's privacy act have been violated. However, the terms of use of Facebook state that any dispute between you and Facebook must be brought in a U.S. county. You want to be party to a class action lawsuit in your home province. Can the provincial privacy act override the forum selection cause in the terms of use and allow the provincial court to certify the class action? Is there "strong cause" for a Canadian court to refuse to enforce the forum selection clause that mandates actions be brought in the U.S.?

Current Status: Contrary to the lower court's findings, the B.C. Court of Appeal found that B.C.'s Privacy Act did not override the forum selection clause of Facebook's terms of use and that there was not "strong cause" for the court to refuse to enforce the forum selection clause. The B.C. Court of Appeal therefore denied the class action certification attempt by the plaintiff, as any action had to be brought in the U.S. county specified in Facebook's terms of use.

Contractual versus Non-Contractual Arrangements

In Scenario I, the Supreme Court of Canada will have to consider the jurisdictional issues that arise from the online conduct of parties that are not bound by contractual arrangements with each other.

In Scenario II, the Supreme Court of Canada will have to consider the jurisdictional issues that arise from the online conduct of parties for which the parties' relationship is governed by contractual arrangements. It remains to be determined whether the Supreme Court of Canada will elect to hear the two cases together.

Concerns of Lower Court Decisions

The lower court decisions have raised a number of concerns, including:

  • the role of Canadian courts in enforcing the laws of other countries, and conversely, the potential for other countries to be enforcing Canada's laws;
  • limitations on free speech on the internet based on a Canadian-centric view of what speech is permissible; and
  • reconciling the conflicting laws of different jurisdictions versus the global content of the internet.

Clarification Expected on the Following Issues

In Scenario I, the Supreme Court of Canada is expected to provide clarity on (i) the circumstances under which a Canadian court may order search engine results to be blocked and any limits that must be imposed on these orders; (ii) whether Canadian courts have the authority to block search results outside of Canada's borders; and (iii) the circumstances in which a litigant is entitled to an interlocutory injunction against a non-party that hasn't actually done anything wrong.

In Scenario II, the Supreme Court of Canada is expected to provide further clarity on the interplay between Canadian laws and the forum selection clauses found in contracts governing internet activities.

We will provide an update once the Supreme Court of Canada issues its decisions in the above cases.

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.

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