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Equustek Solutions Inc. v. Jack (Equustek III)

Closed Contracts Expression

Key Details

  • Mode of Expression
    Electronic / Internet-based Communication
  • Date of Decision
    April 16, 2018
  • Outcome
    Injunction or Order Denied/Vacated
  • Case Number
    2018 BCSC 610
  • Region & Country
    Canada, North America
  • Judicial Body
    Appellate Court
  • Type of Law
    Civil Law, Intellectual Property/Copyright Law
  • Themes
    Content Regulation / Censorship
  • Tags
    Intermediaries Liability, Intellectual Property, Internet Service Providers

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Case Analysis

Case Summary and Outcome

The Supreme Court of British Columbia dismissed an application to set aside the interlocutory injunction earlier granted against Google in Google Inc v. Equustek Solutions Inc. [2017] SCC 34. The case concerned Equustek’s (Plaintiff) claim against Datalink (represented through Defendants) over an intellectual property infringement caused by the defendants who designed and manufactured competing products while acting as plaintiffs’ distributors, using plaintiffs’ trade secrets. Based on the finding that a global de-indexing of the defendant’s domain from Google’s search engine was necessary to prevent irreparable harm to Equustek, the Supreme Court of Canada ordered Google to remove all of the company’s website from its worldwide search engine. However, a temporary injunction blocking the enforceability of the Canadian Supreme Court’s order in the US was granted shortly thereafter by the U.S. District Court of Northern California. In dismissing Google’s application, the Court reasoned that the decision of the US District Court was not sufficient in itself to prove Google’s claim of violation of American law and did not restrict the ability of the Canadian courts to direct parties over whom it had personal jurisdiction.


Facts

The plaintiffs, operating a small business in Burnaby (British Columbia), manufactured networking devices that allowed communications between complex industrial equipment. Datalink, a former distributor of Equustek, allegedly conspired with one of the plaintiffs’ former engineers to design and manufacture a competing product and used Equustek’s trade secrets and confidential information to create and sell the same.

Following the misconduct by the defendants, the plaintiffs procured multiple court orders, including three separate orders prohibiting them from pursuing business anywhere in the world. Equustek also terminated its distribution agreement with the defendants and  demanded that Datalink eliminate all references to Equustek’s trademarks and products on Datalink’s websites. However, the defendants evaded all of these orders by fleeing the jurisdiction and carrying on business on the internet from an undisclosed location.

In absence of any viable recourse, Equustek approached Google to stop listing impugned websites from the search results. Google refused this request. The plaintiffs then brought court proceedings, seeking an order requiring Google to do so. Google, in turn, asked the plaintiffs to obtain an order from the Court prohibiting the defendants from operating the business on the internet. On December 13, 2012, an order ceasing the defendants from operating or carrying on business through any website was issued by the court. In response, Google de-indexed 345 specific webpages from its Canadian search results at www.google.ca, but refused to deindex Datalink’s websites from its global and international search engine results (viz. google.com) beyond its Canada-specific results.

Equustek, therefore, sought an interlocutory injunction to enjoin Google from displaying any part of the Datalink websites on any of its search results worldwide, which was granted by the Supreme Court of British Columbia. At an appellate stage, the Court of Appeal of British Columbia dismissed Google’s appeal affirming a takedown of the Datalink websites from search results globally, on the ground that the court had territorial competence to do so. Google’s appeal against the order of the Appellate Court was subsequently dismissed by the Supreme Court of Canada on June 28, 2017 (Equustek I).

While affirming the injunction, the Supreme Court noted that in a circumstance where the injunction required Google to violate the laws of another jurisdiction, ‘including interference with the freedom of expression principles’ [p. 3], it could apply to the British Columbia Courts to vary the interlocutory order.

On July 24, 2017, in order to prevent an enforcement of the Canadian court order, Google moved for a preliminary injunction against Equustek in the Northern District of California, requesting a declaratory judgment that the Canadian court order is unenforceable in the U.S. and an order be passed preventing enforcement of it.  It argued that the Canadian order violates Communication Decency Act’s immunity for interactive service providers on the internet (under section 230), conflicts with the First Amendment to the U.S. Constitution, and offends principles of international comity (i.e. respect and enforcement of other countries’ laws). The Court found Google satisfied all three elements for immunity i.e. (i) provider of an interactive computer service,  (ii) information in question is being provided by another information content provider’ (Datalink in this case) and the global removal order would effectively hold Google liable as the publisher or speaker of the content on the Datalink website.

By virtue of a preliminary application on November 12, 2017 and a final ruling dated December 14, 2017, the US Court held that the Canadian court order “undermines the policy goals of Section 230 and threatens free speech on the global internet.” By an order dated November 2, 2017, the Court granted Google a temporary injunction blocking the enforceability of the Supreme Court of Canada’s order in the United States (Equustek II). Google’s application before the U.S. District Court was not opposed by Equustek.

Google subsequently applied to set aside the injunction of the Canadian Court before the Supreme Court of British Columbia. It’s claim was primarily based on three grounds:

  • The Court’s global deindexing order had an extraterritorial effect and was unenforceable.
  • The judgment of the U.S. District Court found the Canadian order to be ‘offensive to its core values’, rendering it possible to make an application to the Canadian Court to modify the order. Consequently, there was a material change of circumstances to warrant a revision of the injunction. This was based on the Canadian Appellate Court’s ruling that Google could ‘apply to vary on the basis of evidence that the injunction would require it to violate the laws of another jurisdiction, including an interference with the freedom of expression’ [p. 5]
  • It’s right to free speech and a decision to link websites ‘is separate and distinct from any objectionable content’ that may appear on those websites [p. 4]

Decision Overview

Justice Smith delivered the opinion of the Supreme Court of British Columbia. The issue before the Court primarily pertained to viability of the interlocutory injunction in light of the US District Court’s ruling against its enforcement.

The U.S. District Court, while granting a temporary injunction against the Supreme Court of Canada’s order, had maintained that under the Communications Decency Act, 47 U.S.C. §230 (CDA), Google was a provider of interactive services. The liability imposed by the Canadian injunction by wrongly treating Google as a “publisher or speaker of the information” on the defendants’ websites, thus, “undermined the policy goals of CDA and threatened free speech on the global internet” [p. 4].

In response to the initial arguments raised by Google concerning extraterritoriality and judicial comity, the Court sought not to delve into those issues on account of a declaration already made in Equustek I and prior court proceedings. However, it noted on the basis of a prior ruling that a reconsideration was only possible in a circumstance where the application of the injunction violated the law of another jurisdiction, including an interference with the principles of freedom of expression.

Google contested that this observation by the Supreme Court of British Columbia dated June 11, 2015 was required to be interpreted broadly. Further, by citing the judgment by the US District Court which had granted a temporary injunction, it claimed that the Canadian injunction violated the core American values of freedom of speech, and provided a strong ground for reconsideration of the interlocutory order granted by the Canadian Supreme Court.

In response to the argument above, the Court held that the US District Court had expressly declined to pass any ruling on violation of First Amendment rights by the injunction, more so because Google’s application was not opposed by Equustek. Nevertheless, the decision of the US District Court was not sufficient in itself to prove Google’s claim of violation of American law. Noting that such would have been the case if ‘Datalink had obtained an order from the US District Court requiring Google to link to their websites’, the Court declared that Google was only restricted in its ability to exercise certain rights (of whether to list Datalink’s websites) which was not the same as Google being required to ‘violate the law’ [p. 5]. In simple terms, this did not restrict the ability of the Canadian courts to direct parties over whom it had personal jurisdiction, as the mere effect of the order of the US District Court was only restricted to the extent that any action to enforce the Canadian injunction in US would prove unsuccessful.

With regard to a change in material circumstances warranting revision of the injunction, it was argued by Google that compared to its previous geolocation system whereby internet users could subvert restrictions by entering appropriate URLs (such as ‘google.com’, or google.co.uk) and obtaining access to Google’s search service in other jurisdictions, it had improved its system to deliver search results based by default on the user’s location. Thus, Google could now enforce delisting measures for all users identified as being in Canada. However, the Court disregarded this development as only a “partial solution” [p. 6], noting that the majority of sales by Datalink originated, in fact, in other countries.

Google also raised ineffectiveness of the injunction as a strong reason to strike it down, but the Court was quick to show that constant efforts by Datalink to evade the injunction by creating new websites proved otherwise. On other grounds, the Court declined to rule on plaintiffs’ entitlement to equitable relief or on Equustek’s poor financial circumstances irrespective of lost sales to Datalink, rendering an ‘irreparable harm’ defense inappropriate.

Finally, the claim that the test of mandatory injunction was ‘modified’ in between the court proceedings with the judgment in R. v. Canadian Broadcasting Corp., 2018 SCC 5 now requiring a strong prima facie to succeed at trial was also dismissed by the Court. It held that such a requirement was already established by Equusteck against the Datalink defendants.

Based on the above, Google’s motion to set aside or vary the injunction was dismissed affirming the extraterritorial jurisdiction of the Canadian Courts on parties over whom they had personal jurisdiction, irrespective of enforceability issues that may arise in implementing the order in foreign countries. With the trial of Equustek’s claim against the defendants underway, the plaintiffs may seek a permanent injunction against Google in future.


Decision Direction

Quick Info

Decision Direction indicates whether the decision expands or contracts expression based on an analysis of the case.

Contracts Expression

The judgment contracts expression. By blocking access to information from a search engine on a global scale, it breaches the cautious line that Courts must draw in making orders that may limit exercise of expression in other jurisdictions. As noted by Canadian Civil Liberties Association, a nation’s treatment of freedom of expression forms an integral part of their self-determination, often rooted in historical and social contexts and imbued in evolving constitutional norms and values. To place such a prohibition may, therefore, affect core values of free speech and its varying nuances in legal systems worldwide.

The Canadian Court however held that it was protecting the rights of Equustek pending completion of the intellectual property trial, finding “[i]t has not been suggested that the order prohibiting the defendants from advertising wares that violate the intellectual property rights of the plaintiffs offends the core values of any nation. ” [para. 93 Equustek Solutions Inc. v. Google Inc., 2015 BCCA 265]

Global Perspective

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Global Perspective demonstrates how the court’s decision was influenced by standards from one or many regions.

Table of Authorities

Related International and/or regional laws

  • U.S., 47 U.S.C. §230 (Communications Decency Act of 1996).

National standards, law or jurisprudence

Other national standards, law or jurisprudence

  • U.S., Google LLC v. Equuestek Solutions Inc., 5:17-cv-04207- EJD (2017).

Case Significance

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Case significance refers to how influential the case is and how its significance changes over time.

The decision establishes a binding or persuasive precedent within its jurisdiction.

The decision was cited in:

Official Case Documents

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