Michael Fekete, Christopher Naudie, Evan Thomas
June 17, 2015
On June 11, 2015, the B.C. Court of Appeal released its decision in Equustek Solutions Inc. v. Google Inc., upholding an injunction that requires Google to remove an entire website from its global search index. The Court of Appeal held that the B.C. courts may exercise personal jurisdiction over the Internet search giant, even though Google did not maintain any physical presence in the jurisdiction. The Court granted a remedy that would impact Google’s search results worldwide. The B.C. Court of Appeal’s decision represents a broad assertion of jurisdiction by the Canadian courts over online business and has significant implications for content owners and the operators of the Internet’s technical and business infrastructure, including Internet service providers, network operators, cloud service providers, search engines, social networks, and advertising and marketing companies.
The Underlying Case
Google was an innocent non-party to underlying commercial litigation in British Columbia over misuse of confidential information and trade secrets. The plaintiffs in the underlying case manufactured network hardware and alleged that the defendants had unlawfully used their trade secrets to manufacture a competing product.
The plaintiffs obtained various orders requiring the defendants to:
- stop referencing the plaintiffs’ products on the defendants’ website;
- publish a notice on the defendants’ website redirecting customers to the plaintiffs’ website; and
- disclose their customers’ names to the plaintiffs.
The defendants did not comply, abandoning their defence and ceasing to operate from within British Columbia. Instead, they continued to sell their product online from unknown whereabouts.
In 2012, the plaintiffs sought an injunction against Google to remove the defendants’ website from search results. Google voluntarily removed 345 specific web page addresses (URLs) from search results on Google.ca, its Canada-specific search engine. The defendants evaded these steps by moving their content to different web pages, with different URLs, within their website. The plaintiffs took the matter back to court, seeking an order requiring Google to remove all web pages within the defendants’ domain name from all of its search results worldwide, not just those found through Google.ca.
Before the application judge, Google, which operates primarily from California and has no physical presence in B.C., argued that the B.C. Supreme Court lacked territorial competence over Google. The application judge disagreed. In her decision, the application judge concluded that Google did do business in the province primarily because it sold advertising to B.C. residents, including the defendants. The application judge also concluded that Google had not established that California was a more appropriate forum for adjudicating the application.
Google also argued that there was no authority to make an order of this kind because the order would be against an innocent non-party and would have worldwide effect. Relying heavily on previous decisions involving worldwide Mareva (asset freezing) orders, the application judge concluded that the court had authority to make the order.
Finally, the judge concluded that it was just and equitable to make the order, due to the circumstances of the case.
Google appealed to the B.C. Court of Appeal. In its decision released on June 11, 2015, the Court of Appeal found that the B.C. courts had jurisdiction over Google, agreeing with the application judge’s finding that key parts of Google’s business were carried on within B.C. In addition to relying on the advertising aspects of Google’s business to find jurisdiction, the Court of Appeal also said that the gathering of information by indexing websites that are sites located in B.C. or are the property of B.C. residents was a key part of Google’s business there.
The Court of Appeal held that the granting of orders against non-parties to litigation as an ancillary means of preserving rights was a “well-established jurisdiction of the courts” and that the worldwide effect of the order sought was not an obstacle to granting it. The Court of Appeal also found that on the facts of the case, it was appropriate to grant the order.
This decision potentially expands the remedies available to companies trying to protect their businesses from unfair competition from counterfeit goods or illegally copied content sold or distributed online by individuals who are beyond the effective reach of the courts or are attempting to evade court orders.
More broadly, the decision has significant implications for companies that provide Internet technical or business infrastructure – even if they have no place of business in Canada. Although the remedy in this case was limited to removing a website from indexed search results, it is likely just a matter of time before Canadian courts are asked to grant remedies in respect to a large range of other online activities, if it can be shown that such remedies are an ancillary means of enforcing a court order or preserving legal rights. The requested remedies could include ordering a top-level domain operator (such as “.COM” or “.CA”) to deny use of a domain name, ordering an Internet service provider or network operator to deny access to portions of the Internet, ordering a cloud service provider to deny use of its infrastructure, or ordering an advertising network or exchange to deny access to its network or market. To the extent that such orders are sought and obtained, they may increase the cost of compliance for such companies, particularly if Canadian court orders conflict with the obligations of companies under contracts or the laws of other jurisdictions.