Legal Insights Issue 4/2017, December 2017 – “THE GOOGLE ORDER”

THE GOOGLE ORDER

Nathalie Ker explains an interesting decision by the apex court of Canada


With the rise of online shopping and website-based businesses, the issue of protecting rights on the internet has increasingly vexed courts in many jurisdictions. Can a non-party, e.g. internet service providers or operators of search engines, be regarded as ‘facilitators’ of prohibited acts by a defendant on the internet? Can the court impose orders on such non-parties?

Earlier this year, these questions were before the Supreme Court of Canada in the case of Google Inc. v Equustek Solutions Inc. (2017) SCC 34. The Court handed down its judgment on 28 June 2017, granting a worldwide injunction against Google, a non-party to the main litigation, mandating it to remove websites belonging to the defendant in the main action from search results online.

BACKGROUND FACTS

Equustek Solutions Inc. (“Equustek”), a small technology company in British Columbia, brought an action in April 2011 against one of its distributors, a company by the name of Datalink. Equustek claimed that Datalink, while acting as a distributor of Equustek’s products, began to re-label one of the products and passed it off as its own. Datalink also acquired Equustek’s confidential information and trade secrets, using these to manufacture a competing product.

Equustek obtained court orders requiring Datalink to return to Equustek any information and trade secrets that belonged to Equustek. In addition, Datalink was ordered to post a statement on its websites informing customers that Datalink was no longer a distributor of Equustek’s products and directing customers interested in Equustek’s products to Equustek’s website. However, Datalink then abandoned the proceedings and left the jurisdiction without complying with any of the orders.

In July 2012, Equustek obtained a Mareva injunction freezing Datalink’s worldwide assets, including its entire product inventory. Equustek further sought to have Datalink and its principal found in contempt, but no one appeared on Datalink’s behalf and a warrant of arrest was issued against Datalink’s principal. Despite the numerous court orders, Datalink continued its online business from an unknown location, selling the products in question on its websites to customers all over the world.

Having only obtained paper judgments against Datalink with no relief in sight, Equustek approached Google in September 2012 and requested that it de-index the websites belonging to Datalink. Google refused to do so and Equustek brought proceedings in the Supreme Court of British Columbia seeking an order requiring Google to de-index Datalink’s websites. Google then told Equustek to obtain a court order prohibiting Datalink from carrying on business online, and that it would comply with such an order by removing specific webpages. Due to its internal policy, Google was not willing to remove entire websites. Equustek agreed to try this approach and an injunction was granted in December 2012 ordering Datalink to “cease operating or carrying on business through any website” (“December 2012 Order”).

As Google had not taken down Datalink’s websites, Datalink was able to sidestep the effect of the December 2012 Order by moving its content to new webpages within its websites. Equustek was again left without an effective remedy.

Equustek finally sought an injunction to prohibit Google from displaying any part of Datalink’s websites on any of its search results worldwide. The injunction order (“Google Order”) was granted by the Supreme Court of British Columbia and upheld by the Court of Appeal of British Columbia on Google’s appeal. Google then brought the case to the apex court, the Supreme Court of Canada.

THE JUDGMENT OF THE SUPREME COURT

The Test: Just and Equitable

The Google Order was upheld by the Supreme Court of Canada by a 7:2 majority. The majority judges were satisfied that the case fulfilled the requirements to grant such an injunction. Justice Abella, who gave the decision of the majority, begin by highlighting that the decision to grant an interlocutory injunction is a discretionary one and entitled to a high degree of deference. The judge referred to RJR—MacDonald Inc. v Canada (Attorney General) [1994] 1 S.C.R. 311, which sets out a three-part test for determining whether a court should exercise its discretion to grant an interlocutory injunction: is there a serious issue to be tried; would the person applying for the injunction suffer irreparable harm if the injunction were not granted; and is the balance of convenience in favour of granting the interlocutory injunction or denying it. Ultimately, the question is whether granting the injunction is just and equitable in the circumstances of the case.

Injunction Against Non-Parties?

Justice Abella then addressed Google’s argument that it should be immune from the grant of the interlocutory injunction as it was not a party to the litigation. Justice Abella dismissed this argument, holding that an interlocutory injunction could be granted against a non-party and that the test would be unchanged in these circumstances. Citing the case of MacMillan Bloedel Ltd v Simpson [1996] 2 S.C.R. 1048, Justice Abella stated that where a non-party violates a court order, there is a principled basis for treating the non-party as if it had been bound by the order. The non-party’s obligation arises not because it is bound by the injunction by being a party to the cause, but because it is conducting itself so as to obstruct the course of justice.

In support of its decision, the Supreme Court of Canada drew an analogy with Norwich orders (Norwich Pharmacal Co. v Customs and Excise Commissioners [1974] A.C. 133). A Norwich order is an order granted by the court to compel non-parties to disclose information or documents in their possession required by a complainant. Justice Abella further emphasised that a Norwich disclosure may be ordered against non-parties who are not themselves guilty of wrongdoing, but who are so involved in the wrongful acts of others that they facilitate the harm.

Justice Abella made the point that Datalink was only able to survive on Google’s search engine which directs potential customers to its websites. He then stated that although this did not make Google liable for the harm caused to Equustek, Google was the “determinative player” in allowing the harm to occur.

Worldwide Relief

The Supreme Court of Canada agreed with the court below that the injunction had to have worldwide effect. If the injunction were restricted to Canada only, purchasers from outside the country could still purchase from Datalink’s websites, and Canadian purchasers could still find Datalink’s websites by other means. Justice Abella stated as follows:

“The Internet has no borders — its natural habitat is global. The only way to ensure that the interlocutory injunction attained its objective was to have it apply where Google operates — globally.”

 

 


DISSENTING JUDGMENT

Permanent Injunction and Final Order

It is also useful to note the dissenting judgment delivered by Justices Côté and Rowe. The dissenting judges were of the opinion that the Google Order was effectively a permanent injunction against Google and provided Equustek with more relief than it sought against Datalink. Justices Côté and Rowe argued that the test for interlocutory injunctions did not apply to an order which is effectively final, and the test for a permanent injunction had not been satisfied. Justice Abella tried to address the issue by saying that Google could have applied to have the injunction varied or vacated, but had not done so.

Scope of “Aids and Abets” Too Wide

The dissenting judges acknowledged that a non-party may be liable for contempt if he aided or abetted the doing of a prohibited act. However, the dissenting judges held that Google did not aid or abet the breach of the order by Datalink. Equustek had argued that Google’s search engine was facilitating Datalink’s ongoing breach by leading customers to Datalink websites. This argument was dismissed by the dissenting judges as this would render the scope of “aids and abets” too wide. The dissenting judges gave the example that such an overbroad definition might include the companies supplying Datalink with the material to produce the products, the companies delivering the products, or (as argued by Google), it might also include the local power company that delivers power to Datalink’s physical address.

Google Order Lacks Effectiveness

Further, the dissenting judges agreed with Google that Datalink’s websites could be found using other search engines, links from other sites, bookmarks, email, social media, printed material, word-of-mouth, or other indirect means. The dissenting judges held that this showed the lack of effectiveness of the Google Order.

Alternative Remedies Available

Lastly, the dissenting judges stated that Equustek had other remedies at its disposal. Equustek could have pursued a remedy in the French courts as Datalink had assets in France. Equustek could also pursue injunctive relief against the relevant Internet Service Providers to enforce the December 2012 Order. Equustek also had the option of initiating contempt proceedings in France or in any other jurisdiction with a link to the illegal websites.

COMMENTS

The decision in Google v Equustek is a practical one and provides complainants in Canada with more tools to protect their rights. A Norwich order may only compel a non-party to disclose information and documents, whereas a Google Order goes further and may compel a non-party to carry out, or refrain from carrying out, specified acts to aid in the enforcement of the orders in the main action.

Where a similar situation involving intellectual property or other rights comes before the Malaysian courts, it would be interesting to see whether the Malaysian courts would apply the decision of the Supreme Court of Canada. A litigant seeking a Google Order should be prepared to show that he has exhausted other legal remedies, and that the person against whom the order is sought is the determinative player in facilitating the breach. In light of the points made by the dissenting judges, a complainant should also be prepared to show that the order would be effective in preventing the harm caused to him.


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SUBJECT MATTER: CASE COMMENTARY


WRITER’S NAME : NATHALIE KER


WRITER'S PROFILE:

Nathalie Ker is an Associate in the Dispute Resolution Division of SKRINE. She graduated from the University of Leeds in 2012.

 

 

 
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