The SCC decision in Equustek orders Google to block a search not just in Canada, but globally. As Google turns to US courts for validation, litigators question whether the ruling oversteps jurisdiction.
IT GOES WITHOUT SAYING that any legal dispute that threatens to put limits on the internet is going to attract interest. When the Supreme Court of Canada issued its ruling in Google v. Equustek, 2017 SCC 34, at the end of June there were in excess of 30 intervenors — an almost unheard of number — including some from as far away as South Korea. But that shouldn’t have been surprising given that the case touched on a swath of hot-button issues, from freedom of expression and protection of intellectual property rights to the role of courts in regulation of the internet.
“There was an unbelievable amount of attention,” says Andrew Bernstein, a partner at Torys LLP and practice leader of the firm’s litigation department. “There were more applications for intervention than I’ve ever seen.”
The case focuses on a small tech company and the harm done to it by a counterfeiter. Equustek, a British Columbia maker of industrial communications systems, had already gone to great lengths to stop a company called Datalink from selling pirated Equustek products under its own brand. Finally, after the counterfeiter ignored a series of court orders, the BC Supreme Court issued an injunction requiring Google to remove the Datalink websites from search results — not just in Canada but around the world. Google appealed the case to the Supreme Court of Canada and, on June 28, a decision was issued upholding the BC injunction.
The SCC pointed out that its ruling is specifically about IP. “This is not an order to remove speech that, on its face, engages freedom of expression values,” the decision said. “We have not, to date, accepted that freedom of expression requires the facilitation of the unlawful sale of goods.” It also stressed that, given the circumstances, a worldwide injunction was the only remedy. “The only way to ensure the [order] attained its objective was to have it apply where Google operates — globally.”
The ruling marks the first time a Canadian court has effectively claimed worldwide jurisdiction over the internet. That has many observers worried that the decision will open the floodgates to rulings by foreign courts that seek to restrict what Canadians can access on the internet. “There are a lot of companies that are all very concerned,” says Bernstein, who represented a group of intervenors that opposed the decision, including Kickstarter.
Andrew Little, a partner at Bennett Jones LLP, says the focus now is on how the ruling will be used as a precedent, which he anticipates will be mostly in the technology space. “This is the first time where you have a company like Google that is running an internet business and it’s being affected,” he says. Though Google isn’t being blamed in any way, the SCC described the search engine as “facilitating” the IP infringement.
Little says affected parties may include compa-nies that, like Google, have done nothing wrong but that might be seen as facilitators to wrongdoing by others. He argues that could include internet platforms that link people, whether buyers to sellers or friends. “The concern you have — if you are Facebook, if you are Twitter, if you are Kijiji — is what kind of rights are going to be the subject of the next court order,” says Little.
The internet is a global phenomenon. The legal system, on the other hand, is by its nature rooted in geographic jurisdictions. For almost a long as the internet has been around, there has been tension between businesses and individuals operating on the internet on the one hand and courts seeking to apply limits to their activities on the other hand. In a world were illegal streaming of music and films is rampant and where IP infringement is run-of-the-mill, it’s clear that the courts have been facing an uphill battle.
Among of the top concerns of critics of the Equustek decision is that it may be used by courts in other countries as a tool to limit Canadians’ freedom of speech. “Canada has liberal defamation laws,” says Bernstein. “The bar for defamation is reasonably high, and that means the scope for freedom of expression is quite broad. There are countries where the defamation law is much more onerous. We wouldn’t want the courts of, say, Singapore to be telling Google Canada what [Canadians] can and can’t find when they search.”
The good news, for those concerned about free speech, is that the circumstances of the case are quite specific, making it difficult for courts to use it as a precedent in cases that don’t involve IP. “The question will be, how broad is its scope?” says Little. “Do you have to have a pre-existing court order that is being breached in order to get one of these orders, or is it enough to show that there is a flagrant violation of Canadian law? That will be where the edges get pushed. That’s one of the places. The other place is, what does it mean to facilitate a breach of a court order?”
Danielle Ferron is a Montréal-based senior litigation partner at Langlois Lawyers, LLP and sits on the firm’s board of directors. She praises the decision for being fair to the parties. “What we see from this decision is a willingness of the court to find the best approach for a just and equitable decision in the circumstances of the case,” she says.
Another aspect critics focused on was the fact that Google is a third party that has not been accused of wrongdoing, and yet it is the subject of the injunction. But according to Ferron, that’s not a problem because it’s not uncommon for courts to order third parties such as ISPs to identify an account owner or for companies like PayPal to reveal the identity of a customer, says Ferron. “In this case, Google did not dispute that Equustek was suffering serious harm, and it was not a great inconvenience for Google to fix the problem,” she says.
Google has now taken the case south of the border to the US District Court for Northern California in a bid to test the validity of the Supreme Court of Canada ruling. It is arguing that the Canadian court has overstepped its jurisdiction and its order to de-index Datalink websites globally goes against US protections of freedom of speech.
One of the unusual aspects of the case was the determination of the perpetrator. Datalink had originally been a reseller of Equustek products but later began producing counterfeit versions sold under its own name. First, Equustek tried to use the courts to force Datalink to desist, but Datalink ignored the court orders so flagrantly that a warrant was issued for the arrest of the company’s owner, a man named Morgan Jack. “Equustek went to court numerous times because Datalink kept on trying new ways [to circumvent the rulings],” says Ferron. Jack eventually fled the country, continuing his counterfeiting operation in an unknown jurisdiction.
The decision to ask the BC Supreme Court for an international injunction was a last resort. “Equustek tried other means, but they weren’t able to get the intellectual property infringement stopped,” says Michael Crichton, a partner at Gowling WLG (Canada) LLP and leader of the firm’s IP litigation and strategy group. “Google even de-indexed a bunch of pages on the infringer’s website, but the infringer just moved the content to new webpages and carried on. So from Equustek’s point of view, the only alternative was to seek an order that required the search engine to de-index all of the websites.”
In the world of intellectual property, many lawyers cheered the SCC decision, arguing that as a precedent it gives them an important new tool in the protection of clients’ IP. Crichton says its effectiveness will be limited to only a narrow range of cases due to the very specific circumstances of Equustek, which focuses tightly on IP and a narrow set of facts including a determined and relentless fraudster. “The Supreme Court decision said, when the circumstances are just right, as they were in this case, then you can enjoin a bad guy on a global basis,” he says.
From a Canadian legal perspective, the Supreme Court has not gone beyond what they are permitted based on the law as it stands, he argues. Still, he acknowledges that precisely how the decision will impact the law going forward, especially as it relates to the internet, remains an open question.
“The broader issue that some people have raised is, how far does this go? Where does it stop?” says Crichton. “What if the supreme court of country X [orders the global shutdown of] a website that was trying to express a certain political point of view, just like the Supreme Court of Canada did here in this case?”
For his part, Crichton argues that likely won’t be a serious issue. For those in the world of intellectual property, particularly software and music, the ruling is good news. Since the rise of the internet, they have suffered major losses from piracy and they’ve been unable to do much about it. That may be about to change. Says Crichton: “The door is now open in Canada for rights holders to use this decision to try to obtain a more favourable remedy for themselves. It is something that rights holders are going to be relying on to help them protect their rights.”