Canada: Injunction With Extraterritorial Effect Against A Non-Party: The Google Inc. v. Equustek Solutions Inc. Decision

1. The context

According to the summary of facts set out in the decision of the Supreme Court of Canada1, Equustek Solutions Inc. ("Equustek"), a manufacturer of networking devices in British Columbia, entered into a distribution agreement with Datalink Technologies Gateway Inc. ("DataLink") for the online distribution of its products.

In 2011, Equustek accused DataLink of counterfeiting its products and passing them off as its own. Equustek accordingly obtained an injunction ordering DataLink to return all documentation in its possession belonging to Equustek to it and to post a statement on its website completely dissociating itself from Equustek.

Not only did DataLink not obey the court order, it left the jurisdiction, relocating in an unknown location outside Canada, and continued to sell counterfeited products of Equustek throughout the world via its website.

While Equustek continued its legal efforts against DataLink by obtaining other injunctions, including a Mareva injunction freezing DataLink's inventory and making an application to have DataLink found in contempt of court, none of these remedies were effective at putting an end to the harm it was suffering. Under the circumstances, Equustek felt it had no other choice but to apply to the Supreme Court of British Columbia for an injunction compelling Google Inc. ("Google") to de-index DataLink's websites from its search engine, not only for google.ca, but for all Google sites throughout the world.

The B.C. Supreme Court had to decide whether Google, a non-party to the proceedings between Equustek and DataLink, could be ordered in an interlocutory injunction to de-index DataLink's websites from its search engine, and whether the order could be worldwide in scope.

Equustek argued before the Court that it was being irreparably harmed by the fact that Google's search engine was referring web users to DataLink's websites, which were being used to sell its counterfeited products. Equustek therefore maintained that an interlocutory injunction against Google was necessary to put an end to DataLink's harmful activities.

While Google did not dispute that Equustek was suffering irreparable harm that it was inadvertently facilitating through its search engine, it submitted three arguments in its defence. First of all it maintained that as a non-party it should be immune from an injunction. Second, it argued that an injunction was not necessary to prevent the harm and would not be effective. Third, it maintained that the order should not be extraterritorial in scope and that it constituted an infringement of the right to freedom of expression.

On September 23, 2011, Justice Fenlon of the B.C. Supreme Court granted Equustek's application for an injunction against Google2. This decision was upheld by the Court of Appeal for British Columbia3. Google appealed that decision to the Supreme Court of Canada.

2. The Supreme Court of Canada's decision

In its decision of June 28, 2017, the Supreme Court of Canada dismissed Google's appeal and upheld the interlocutory injunction issued against it. The reasons for judgment of the seven majority judges were drafted by Justice Rosalie Abella. Justices Côté and Rowe dissented.

According to the majority, the three criteria set out in the Court's decision in RJR – MacDonald Inc. v. Canada (Attorney General)4 for the issuance of an injunction against Google were satisfied. The Court thus considered that there was a serious issue to be tried, that DataLink's actions were causing Equustek irreparable harm, and that the balance of convenience favoured the granting of the injunction. In addition, the Court concluded that an interlocutory injunction was both necessary and effective to put an end to the harm being suffered by Equustek, given the determinative role played by Google in allowing the harm to occur. According to the Court, a worldwide injunction was the only effective way to mitigate the harm suffered by Equustek. The Court also considered that the balance of convenience favoured granting the injunction, as the countervailing harm to Google was minimal compared to that suffered by Equustek since 2011.

With respect to the question of whether an injunction could be issued against a non-party, in this case Google, the Court referred to judgments where Norwich and Mareva injunctions had been issued against non-parties5, on the basis of their determinative role in occasioning the harm complained of by the applicants. In this regard, the Court considered that a non-party who disobeys an order or interferes with its purpose may be found to have obstructed the course of justice6. The courts in the cases referred to also considered that cooperation of the non-party was necessary to put an end to the harmful activity.

Regarding the extraterritorial effect of the injunction, the Supreme Court of Canada stated that courts may issue such injunctions where it is necessary to ensure the injunction's effectiveness. The Court pointed out that many other jurisdictions, including France and Spain, approve of and apply this method. Moreover, because "[t]he Internet has no borders – its natural habitat is global"7, the Court considered it imperative to make the injunction worldwide in scope in order to ensure that it applied "where Google operates – globally"8. In the Court's view, a worldwide injunction against Google was the only effective way to mitigate the harm to Equustek9.

Finally, the Court dismissed as theoretical Google's arguments based on international comity and freedom of expression, but added that if Google could prove that complying with the injunction would require it to violate the laws of another jurisdiction, including those pertaining to freedom of expression, it could apply to the British Columbia courts to vary the order accordingly.

For their part, the dissenting judges were of the view that the judge at first instance should have exercised judicial restraint and not issued the injunction against Google. In their view, the issued injunction, while interlocutory in form, was permanent in effect, as it amounted to a final determination of the action, and gave Equustek more equitable relief than it initially sought. As the central criteria for a permanent injunction is an extensive review of the merits of the case, which was not performed in this case, the dissenting judges considered that Google's appeal should have been allowed.

In addition, the dissenting judges agreed with Google's argument that an injunction should not be issued against it because it was a non-party to the proceedings and did not contribute to or encourage the illegal activity DataLink was alleged to have engaged in. Furthermore, Justices Côté and Rowe were of the view that no mandatory order should have been made against Google, as the order requires ongoing modification, updating and judicial supervision10. Extensive judicial supervision is necessary because other such websites are constantly being created and must be added to the list of sites that Google is required to de-index.

Moreover, the dissenting judges maintained that Equustek failed to prove the effectiveness of the requested order at preventing DataLink from carrying on its illegal activities. By the same token, the dissent considered that the order was not an effective means to mitigate the harm suffered by Equustek, as web users can find other DataLink websites by "using other search engines" or "other indirect means"11. Finally, the dissenting judges concluded that other more appropriate remedies were available to Equustek.

In conclusion, in this decision the Supreme Court of Canada found that the order issued by the B.C. Supreme Court was justified because there was a serious issue to be tried, irreparable harm had been shown, and the balance of convenience favoured the granting of the injunction. The Court also confirmed that an injunction can be issued against a non-party and may be international in scope if necessary to respect decisions rendered by Canadian courts12.

Thanks to Paul-Arthur Gendreau, Counsel, and Karyne Virgile, Student-at-Law, for their contribution to the preparation of this article.

Footnotes

1. Google Inc. v. Equustek Solutions Inc., 2017 SCC 34.

2. Equustek Solutions Inc. v. Jack, 2014 BCSC 1063

3. Equustek Solutions Inc. v. Google Inc., 2015 BCCA 265

4. [1994] 1 S.C.R. 311

5. Norwich Pharmacal Co. v. Customs and Excise Commissioners, [1974] A.C. 133 (HL), p. 175; York University v. Bell Canada Enterprises (2009), 311 D.L.R. (4th) 755 (Ont. S.C.J.); Cartier International AG v. British Sky Broadcasting Ltd., [2017] 1 All E.R. 700 (C.A.), par. 53

6. Supra, note 1, par. 29

7. Supra, note 1, par.41.

8. Ibid.

9. Ibid., par. 53

10. Supra note 1, pars. 75 and 76, citing National Commercial Bank of Jamaica Ltd. v. Olint Corp., [2009] 1 W.L.R. 1405 (P.C.), par. 20; Redland Bricks Ltd. v. Morris, [1970] A.C. 652 (H.L.), pp. 665-666.

11. Ibid, par. 79

12. See also: Third Parties' Role in Enforcing Injunctions: John and Jane Doe, Beware!

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