Canada: Google. v. Equustek Solutions

Last Updated: December 19 2017
Article by Fogler, Rubinoff LLP

(We Are Not the World)

Now that we are 20-some years into the Internet revolution it has become clear that as laws are necessarily tied to a jurisdiction they can appear ineffective when confronted by a globalised suite of technologies that are designed to efficiently route around a locally expressed challenge to data transmission. That dilemma is increased when different jurisdictions cannot agree on the breadth of protection to be offered to Internet intermediaries.

In June of this year in a case which involved the assertion of intellectual property rights, the Supreme Court of Canada by a majority of 7-2, upheld a worldwide interlocutory injunction ordering Google to de-index the website of Datalink Technology Gateways from its global search results as those websites were being used to sell products that violated Equustek Solutions' intellectual property rights. Via this controversial decision the Supreme Court asserted a global power to alter online content for Internet users.

Equustek, a small British Columbia based technology company, initially launched an action against a distributor claiming that it had re-labelled one of its products and passed it off as its own. It further alleged the distributor misappropriated confidential information and trade secrets, using them to design and manufacture a competing product. The distributor initially filed statements of defence disputing Equustek's claims, but eventually abandoned the proceedings and left British Columbia. Some of those statements of defence were subsequently struck. Despite court orders prohibiting the sale of inventory and the misuse of Equustek's intellectual property, the distributor continued to carry on its business from an unknown location, selling its products to customers online. Equustek then requested that Google de-index the distributor's websites and in refusing that request Google asked Equustek to instead obtain a suitable court order prohibiting the distributor from carrying on business on- line.

Such an injunction was issued by the Supreme Court of British Columbia ordering the distributor to cease operating or carrying on business through any website. Google subsequently advised Equustek that it had de-indexed 345 specific webpages associated with the distributor. It did not, however, de-index all of the distributor's websites. De-indexing webpages but not entire websites proved to be ineffective since the distributor simply moved the objected to content to new pages within its websites. Moreover, Google had limited the de-indexing to searches conducted on google.ca. Equustek then obtained an interlocutory injunction to enjoin Google from displaying any part of the distributor's websites on any of its search results worldwide. The Court of Appeal for British Columbia dismissed Google's appeal.

The 3 part test usually applied in Canada for determining whether an interlocutory injunction should be granted involves asking if:

  1. there is a serious issue to be tried;
  2. an irreparable harm would result if the injunction is not granted; and
  3. the balance of convenience favours granting the injunction.

The parties agreed on the first two parts of the test; however, on the balance of convenience point Google argued that as it was not a party to the original intellectual property litigation it should be immune from the worldwide injunction, and that the injunction was not necessary nor effective in preventing the complained of harm.

Abella J, writing for the majority of the Supreme Court, rejected Google's arguments, stating that Google facilitated the defendant's unlawful activity through its search engine, and that restricting the injunction to the Canadian search engine alone would not be effective in reducing the harm. The majority found that while Google was not liable for the harm, it was "a determinative player in allowing the harm to occur". The Supreme Court also held that the requested worldwide injunction did not engage freedom of expression concerns.

However, in early November the Supreme Court's muscular approach to the indirect protection of Canadian intellectual property rights was blunted when the District Court for Northern California granted Google's unopposed motion for preliminary injunctive relief, blocking the enforcement of the worldwide interlocutory injunction. In the US court proceedings Google asserted that the Canadian order was unenforceable in the US as it was inconsistent with the US Constitution's protection of the freedom of speech as well as provisions in the Communication Decency Act. Section 230 of that Act is intended to immunize online intermediaries that host or republish speech by protecting them against a range of laws that might otherwise be used to hold them legally responsible for publishing third-party content.

The District Court held that Google is an "interactive computer service provider" within the meaning of Section 230 and that the information in question was created by Datalink, a third party. The Court found that the Canadian order would hold Google liable as the publisher of Datalink's information because it imposes liability for failing to remove third-party content from its search results. Thus, the Court concluded that Google was eligible for the immunity offered under Section 230 and that Google would suffer irreparable harm if it failed to intervene. The District Court found it unnecessary to review Google's First Amendment based argument.

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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