Supreme Court of Canada Upholds Worldwide De-indexing Order against Google

Posted by Lorraine Fleck on June 28, 2017 · Leave a Comment 

Today, Canada’s Supreme Court upheld a worldwide interlocutory injunction against Google in Google Inc. v. Equustek Solutions Inc., 2017 SCC 34. The injunction ordered Google to de-index websites selling intellectual property infringing product contrary to a court order.

A. Background

Equustek is a small technology company based in British Columbia (B.C.). It manufactures networking devices that allow industrial equipment made by different manufacturers to communicate with each other.

The underlying lawsuit between Equustek and the proprietors of the websites at issue – Morgan Jack, Datalink Technology Gateways Inc. and Datalink Technologies Gateways LLC (collectively “Datalink”) – claimed that Datalink, while acting as a distributor of Equustek’s products, began to relabel one of the Equustek products and pass it off as Datalink product. During the distributor relationship, Datalink acquired confidential information and trade secrets belonging to Equustek, and used that information to design and manufacture a competing product (GW1000). Datalink fulfilled orders for Equustek product with the GW10000. When Equustek discovered Datalink’s activities which essentially was a classic “inside job” of intellectual property theft, it terminated the distribution agreement and demanded Datalink delete all references to Equustek products and trademarks on its websites.

B. Litigation Chronology

Equustek faced a protracted legal battle that is detailed in a chart available here. In sum:

1. Equustek sued Datalink in British Columbia Supreme Court (BCSC) in April 2011. The BCSC grant multiple orders barring Datalink from the unauthorized use of Equustek’s intellectual property rights, including selling infringing products and engaging in activities that infringed Equustek’s intellectual property.
2. Datalink ignored the various Court orders, stopped defending the lawsuit, and essentially skipped the jurisdiction to whereabouts unknown while continuing to flout the Court orders and sell product violating Equustek’s rights via the Internet. Datalink was eventually found in contempt of Court.
3. Equustek was unable to have the Datalink websites removed by their hosting companies. Equustek approached Google and requested that it de-index the Datalink websites. When Google refused, Equustek brought court proceedings seeking an order compelling Google to de-index the Datalink websites.
4. Upon being served, Google asked Equustek to obtain a Court order prohibiting Datalink from carrying on business on the Internet, indicating Google would comply with such an order by removing specific webpages as per Google policy. Equustek agreed to try this approach and was successful in obtaining such an order in December, 2012.
5. Google proceeded to de-index 345 specific Datalink webpages accessed via google.ca, but not other Google search engine websites, between December 2012 and January 2013. However, this resulted in Datalink moving objectionable content to new pages within its websites, again circumventing the various court orders and creating a “whack-a-mole” situation. Further, because an Internet searcher in one country can search the Internet using other Google sites (e.g. a Canadian user can search the US Google site by typing http://www.google.com, not http://www.google.ca, in their Internet browser), potential Canadian customers of Datalink were able to visit Google search engines for other countries and still access Datalink’s websites. As most of Datalink’s customers were outside of Canada, Google’s de-indexing did not have the intended effect.
6. Equustek sought and was granted an interlocutory injunction barring Google from displaying any portion of the Datalink websites on any Google search results worldwide. The Court noted that to be effective, even in Canada, Google must block Datalink search results on all of its websites, otherwise the Court’s process is not protected.
7. Google appealed to the Court of Appeal of British Columbia, which dismissed Google’s appeal. The appeals Court found that the injunction against Google was the only practical way to prevent Datalink from ignoring the Court’s several orders, and there were no identifiable comity or freedom of expression concerns to bar upholding the injunction.

Google then sought the Supreme Court of Canada’s permission to appeal which was subsequently granted.

C. The Supreme Court of Canada’s Ruling

Before the Supreme Court, Google did not dispute that Equustek had a serious claim or was suffering irreparable harm via the Google search engine. Google also did not suggest that it would suffer a material inconvenience or significant expenses in de-indexing the Datalink websites. While Google acknowledged that it inadvertently facilitates the harm through its search engine which leads purchasers to the Datalink websites, Google made various arguments, including:

1. That the injunction was unnecessary to prevent irreparable harm to Equustek and was not effective;
2. It should be immune from the injunction as a non-party to Datalink’s illegal activities;
3. The extraterritorial reach of the order was unnecessary.
4. The order violated international comity because it is possible that the order could not have been obtained in foreign jurisdiction or would result in Google violating the laws of that jurisdiction.
5. Freedom of expression concerns tipped the balance against upholding the injunction against Google.

The majority of the Supreme Court ruled against Google and dismissed the appeal. The important points of the decision are as follows.

a. Non-party search engines can be subject to Canadian court orders

It is well established in Canadian law that where a non-party violates a Court order, there is a principled basis for dealing with the non-party as though the Court order was directed against then. The obligation for a non-party to comply with the Court order in issue is necessary to prevent the obstruction of justice.

b. Canadian courts can make orders that have extra-territorial effects

Again, this is not new law in Canada or elsewhere. The Supreme Court recognized that in the Google case, Datalink’s activities were occurring online and globally due to the borderless nature of the Internet. The majority of the Supreme Court noted:

“The only way to ensure that the interlocutory injunction attained its objection was to have it apply where Google operates – globally…. There is no equity in ordering an interlocutory injunction which has no realistic prospect of preventing irreparable harm.” (at para. 41).

The Supreme Court also noted that the order at issue did not require Google to take steps to de-index Datalink websites all over the world, just where Google controls its search engine. As Google had acknowledged this is a control that it can do – and does – with relative ease, there was no harm to Google due to the international scope of the order.

c. Global de-indexing orders to prevent IP violations do not offend comity…

The Supreme Court found Google’s comity argument theoretical. Google itself acknowledged earlier during the litigation “that most countries will likely recognize intellectual property rights and view the selling of pirated products as a legal wrong”.

d. Or violate freedom of expression rights

The Supreme Court also dismissed Google’s freedom of expression argument. The Supreme Court noted that if Google had evidence that complying with the order would result in Google violating another jurisdiction’s freedom of expression or other laws, it could always apply to the BC courts to vary the order. The Supreme Court noted that Google had yet to make such an application. Further, on freedom of expression, the Supreme Court observed at para. 48:

“This is not an order 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. We have not, to date, accepted that freedom of expression requires the facilitation of the unlawful sale of goods.”

The Supreme Court then noted that Google acknowledged that it does alter search results to avoid generating links to hate speech, copyright infringing websites pursuant to notices under the U.S. Digital Millennium Copyright Act, child pornography and websites that are subject to court orders.

Ultimately, while Google may not be liable for the harm to Equustek, Google is the conduit for how that harm has continued given Datalink’s defiance of multiple court orders from an unknown location. As the Court noted, “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” (para. 52).

D. Why Does This Decision Matter?

 If you are outside the IP space, you may be wondering – why is this decision such a big deal?

Here’s why.

While the Internet has greatly facilitated beneficial personal and commercial connections throughout the world, that very positive benefit has been accompanied by a significant amount of illegal online activity with real consequences. The Internet both giveth and taketh away – giveth the convenience of online shopping, news and communication, but also taketh away money from businesses of varying size by allowing counterfeiters to use the Internet’s anonymity as a cloak for their illegal activities.

Despite a popular misconception, counterfeit and pirated goods are not harmless. Apart from the lost revenue to the IP rights holders that can lead to laid off employees, stalled business growth and trickle down economic consequences, there are important health, safety and child labour concerns with counterfeit goods, which are often linked to organized crime and sometimes terrorist funding.

Counterfeiting, like any other crime, is not victimless.

The Google v. Equustek decision will give Canadian IP owners a valuable tool to more readily enable the enforcement of their IP rights on the Internet. Enforcement is not going to become effortless overnight, but hopefully most brand owners seeking to block the sales of infringing products in Canada will not have to go through the over six (6) year legal battle that Equustek waged and the associated money, time and energy.

Looking forward, the Google decision could be applied to require Google to de-index websites hosting defamatory and revenge porn content. But this application of the Google decision is not yet tested in the Courts.

Time will tell.

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