Case Summary and Outcome

The Supreme Court of Canada granted an interlocutory injunction against Google to remove all of a company’s websites from its worldwide search engine. Google was a third party to the underlying dispute, which concerned a claim by Equustek (plaintiff) against Datalink (defendant) over intellectual property infringement. The injunction was ordered in the interest of justice with the Supreme Court of Canada finding that de-indexing the defendant’s domain from Google’s search engine globally was necessary to prevent irreparable harm to Equustek. The Supreme Court was unconvinced by Google’s arguments that a global de-indexing order would offend international comity, would unreasonably inconvenience the search engine, and would interfere with the right to freedom of expression.

This case entered a new phase November 2, when the U.S. District Court of Northern California granted Google a temporary injunction blocking the enforceability of the Supreme Court of Canada’s order in the U.S. The California Court granted the injunction on the basis that the company was protected as a neutral intermediary under Section 230 of the Communications Decency Act 1996. It also said that “By forcing intermediaries to remove links to third-party material, the Canadian order undermines the policy goals of Section 230 and threatens free speech on the global internet.” If, as expected, Google applies to make the injunction permanent – and succeeds, it is likely to return to Canada to argue that its order violates the law of another country.

Facts

Equustek is a small British Columbian information technology company that manufactures complex networking devices. Datalink, a former distributor of Equustek, allegedly relabeled one of Equustek’s products to pass it off as its own. Datalink also allegedly used Equustek’s trade secrets and confidential information to create and sell a competing counterfeit product, increasing its sales at the expense of Equustek.

Upon discovering Datalink’s misconduct, Equustek terminated its distribution agreement with the company. Equustek also demanded that Datalink eliminate all references to Equustek’s trademarks and products on Datalink’s websites. Equustek sued Datalink’s principal (Morgan Jack) and two Datalink affiliates (together “Datalink”) for misappropriation of intellectual property in 2011.

At some point after the filing of the suit, Datalink fled the jurisdiction but continued conducting business online from an unknown physical location despite efforts to locate Datalink by Equustek.

There were several interlocutory injunctions associated with the lawsuit (i.e. orders that preceded the actual trial). In 2011, the trial court ordered Datalink to return documentation from Equustek and refrain from referring to its products on the internet. In 2012, the trial court ordered a freeze of Datalink’s worldwide assets.

Google Inc. (Google) is a worldwide search engine that handles 70-75 percent of the world’s internet web searches. With Datalink continuing to do business on the web, Equustek approached Google requesting that they de-index (stop listing on its search engine) Datalink’s websites. Google requested that Equustek produce a court order. Subsequently, a court ordered Datalink to “cease operating or carrying on business through any website.” [para. 14] Following this order, Google removed 345 Datalink webpages from google.ca, its default Canadian domain, but refused to de-index the entire site or remove the impugned sites from its global domain (google.com).

In response to Google’s measures, Datalink moved the de-indexed content elsewhere on its site. This meant the content would still appear on search results (as it was no longer hosted on a de-indexed site). Equustek sought a pre-trial order for Google to remove all of Datalink’s websites from its worldwide search engine. The trial court granted the interlocutory injunction. Google fought the court order, which the Court of Appeals of British Columbia affirmed. Google appealed to the Supreme Court of Canada.

Decision Overview

The Court further explained that interlocutory injunctions are made before a final decision in a case, which means they are a temporary means of preserving the position of the parties to the dispute pending the outcome of the case. The fundamental question for an interlocutory injunction is “whether granting the injunction would be just and equitable in all the circumstances of the case.” [para. 25] To inform that overarching question, the Court had to consider a three-factor test:

1. Is there a serious issue in the case?
2. Would irreparable harm occur without the injunction?
3. Does the balance of convenience favor or disfavor the injunction?

Google did not dispute that there was a serious issue to be tried between Equustek and Datalink in their intellectual property dispute. Google also did not dispute that Equustek was suffering irreparable harm by Datalink’s ongoing web business, facilitated indirectly by Google. However, Google did claim that an order was both ineffective and unnecessary to prevent the irreparable harm to Equustek.

The Court noted that injunctions could be granted against third parties when necessary. In relation to Google in the present case,  the Court observed that “the interlocutory injunction … flows from the necessity of Google’s assistance in order to prevent the facilitation of Datalink’s ability to defy court orders and do irreparable harm to Equustek. Without the injunctive relief, it was clear that Google would continue to facilitate that ongoing harm.” [para. 35] The Court also noted that the appeal did not challenge the Court’s jurisdiction over Google as a result of its carrying on business in British Columbia through advertising and search operations. Instead, Google was challenging the global reach of the order. The Court reasoned that “[w]hen a court has in personam jurisdiction, and where it is necessary to ensure the injunction’s effectiveness, it can grant an injunction enjoining that person’s conduct anywhere in the world.” [para. 38] In the context of the present case, the Court remarked that “[t]he Internet has no borders — its natural habitat is global,” adding that any effective injunction would necessarily have a global impact. [para. 41]

Google also made the argument that the order could impinge on international comity because it is possible that the order could not have been obtained in a foreign jurisdiction, or that to comply with it would result in Google violating the laws of that jurisdiction. The Court found this unconvincing, and theoretical. The Court also highlighted that the court order could be modified following the presentation of evidence that the order offended freedom of expression or international comity.

Google also argued that the court order to de-index the website would violate its right to freedom of expression. However, the Court found no authentic matters of expression at stake. The Court held that the interlocutory order was not “to remove speech that, on its face, engages freedom of expression values, it is an order to de-index websites that are in violation of several court orders,” in particular websites that allegedly infringe on Equustek’s intellectual property rights. [para. 48]

The Court noted that a variety of court orders had already been granted in an attempt to prevent harm to Equustek, but they were ineffective because Datalink fled the jurisdiction and continued selling counterfeit products online, indirectly facilitated by Google. The Court found that “Datalink is only able to survive — at the expense of Equustek’s survival — on Google’s search engine which directs potential customers to its websites. … This does not make Google liable for this harm. It does, however, make Google the determinative player in allowing the harm to occur.” [para. 52 and 53]

Google argued that the inconvenience of the order to it supported the denial of the interlocutory injunction. The Court was unconvinced, finding that it would have been fairly easy for Google to remove Datalink’s entire website from its search engine (as opposed to individual pages), as well as to remove the website from its international search engine (.com instead of just .ca). Google regularly removes entire websites from its search engines, such as for child pornography, hate speech, and potential copyright violations received under the United States’ Digital Millenium Copyright Act (DMCA). In other words, there was no evidence that Google would be inconvenienced in any material way or would incur any significant expense because of the order.

In summary, the Court held that the interlocutory injunction for Google to remove Datalink’s websites from its global search engine was fair and just. The Court concluded that “[t]he interlocutory injunction in this case is necessary to prevent the irreparable harm [to Equustek] that flows from Datalink carrying on business on the Internet, a business which would be commercially impossible without Google’s facilitation.” [para. 42]

Côté and Rowe, JJ., delivered a dissenting opinion. The justices argued that the injunction was effectively a permanent injunction and thus subject to a different test with a higher burden than an interlocutory injunction. The justices concluded that Google was an innocent third party that did not aid and abet in the alleged offense, and the injunction required ongoing court supervision and thus was an onerous use of the court and public’s resources.

Temporary Injunction Granted by U.S. District Court of Northern California

This case entered a new phase November 2, when the U.S. District Court of Northern California granted Google a temporary injunction blocking the enforceability of the Supreme Court of Canada’s order in the U.S. Google argued that the Canadian order was “unenforceable in the United States because it directly conflicts with the First Amendment, disregards the Communication Decency Act’s immunity for interactive service providers, and violates principles of international comity.”

The California Court granted the injunction on the basis that the company was protected as a neutral intermediary under Section 230 of the Communications Decency Act 1996. Although the Court didn’t address Google’s other arguments it stated that “By forcing intermediaries to remove links to third-party material, the Canadian order undermines the policy goals of Section 230 and threatens free speech on the global internet.”

If, as expected, Google applies to make the injunction permanent – and succeeds, it is likely to return to Canada to argue that its order violates the law of another country.