Google V. Equustek Solutions: The Cost of Doing Business?

Lisa Macklem

Whether this is a simple case of the cost of doing business or just another case of insisting that Internet service providers and search engines become Internet police, there should be better parameters in place to protect the freedom of speech and prevent the abuse of the system....

- Lisa Macklem

The Supreme Court of Canada heard arguments in Google Inc. v. Equustek Solutions Inc., et al. on December 6, 2016. The proceedings were webcast live. The case began in British Columbia and proceeded to the Supreme Court via Equustek Solutions Inc. v. Google Inc., 2015 BCCA 265, heard on October 27 and 28, 2014, with additional submissions on December 4, 22, and 23, 2014 and a final judgment from the British Columbia Court of Appeal on June 11, 2015. This case’s importance was summed up by Michael Geist in The Globe and Mail on December 13, 2016: “a case that strikes at the heart of law in the online world.” The case garners international interest because of the scope of its central concern about jurisdiction in relation to the Internet. Does any country - in this case Canada - have the authority to block search results outside its own borders?

The case stems from a dispute between Equustek Solutions Inc. and Datalink Technologies Gateways LLC (Equustek Solutions Inc. v. Jack, 2012 BCSC 1490). The two entities had been in business together for a number of years with Equustek designing and manufacturing industrial network interface products and Datalink acting as distributors and sales agents. When this relationship broke down, Equustek took over its own marketing, and Datalink developed an interface heavily reliant on that developed by Equustek. The competing product, GW1000, was designed using Equustek’s trade secrets. Equustek sought a Mareva injunction to protect its trade secrets which Justice R Punnett granted.

Datalink proved to be adept at avoiding compliance with the order by changing websites. Equustek then filed what the court in Equustek Solutions Inc. v. Jack, 2013 BCSC 882 referred to as a “substantive application to compel Google Inc. and Google Canada... to cease indexing or referencing Datalink websites”(para 2). Google opposed the application on grounds that the British Columbia Court had neither jurisdiction over Google Inc., which is based in the US, nor jurisdiction over Google Canada, which is based in Nova Scotia, and neither company does business in British Columbia except through a virtual presence. In addition, Google asserted that it “has a policy of not censoring all websites or categories of URLs, although it will voluntarily block a webpage that contravenes a court order” (para 3). Indeed, Google had voluntarily removed 345 Datalink webpages. In this action, Equustek was seeking an order to compel Stephen Smith to appear for cross-examination on an affidavit he’d sworn about Google. Cross-examination was being sought to clarify Google’s corporate structure and whether Google was inadvertently aiding Datalink in contravening the injunction against it. The court also acknowledged that “Google is a non-party that has already gone to some lengths to curtail any inadvertent assistance, blocking close to 350 websites linked to the defendants. To a significant degree, Google is an innocent bystander caught in the crossfire of the parties’ dispute” (para 16).

Questions of how to regulate information on the Internet and how to enforce legal actions worldwide, are the ones that every country will have to grapple with

The first action against Google was an interim injunction ( Equustek Solutions Inc. v. Jack , 2014 BCSC 1063) to restrain both Google Inc. and Google Canada from including Datalink’s websites in their search results globally. Madam Justice Lauri Ann Fenlon stipulated that the action should only apply to Google Inc. and pointed out that “[t]his application raises novel questions about the court’s authority to make such an order against a global Internet service provider” (para 1). Issues raised in the case were whether the court had territorial competence over a worldwide Internet search provider, and even if the answer to that question was yes, was California the more appropriate forum? Madam Justice Fenlon ultimately concluded that the court did have territorial competence and that British Columbia was the appropriate forum and granted the injunction. While Google may be a non-party - “an innocent bystander” (para 156) - to the ongoing litigation, the court found that its on- going failure to stop access to the plaintiffs’ websites was “unwittingly facilitating the defendants’ ongoing breaches of this court’s orders” (para 156).

Google then filed for leave to appeal and an interim stay of the order ( Equustek Solutions Inc. v. Google Inc. , 2014 BCCA 295). At this instance, Justice Willock granted leave to appeal, citing the novel and important issues of the case, but refused the stay. Justice Harvey M. Groberman of the British Columbia Court of Appeal granted intervenor status to three out of four applicants on September 22, 2014 ( Equustek Solutions Inc. v. Google Inc. , 2014 BCCA 448). The Samuelson-Glushko Canadian Internet Policy & Public Interest Clinic (“CIPPIC”) - associated with the Centre for Law, Technology, and Society at the University of Ottawa - was denied intervenor status because Justice Groberman determined that CIPPIC’s position was unlikely to be distinct from Google’s position and would thus not add a unique perspective to the matter

The Canadian Civil Liberties Association (“CCLA”); the Electronic Frontier Foundation (“EFF”); and the International Federation of Film Producers Associations (“IFFPA”) with the International Federation of the Phonographic Industry (“IFPI”) were given leave to respond, though the court insisted that they be brief, limiting them to 6, 8, and 10 pages. The justice asserted that “[t]he CCLA is well-placed to present arguments dealing with freedom of expression and to deal with transnational aspects of it” (para 20). The EFF was granted leave to intervene largely based on its familiarity with American law and the treatment of similar issues. Justice Groberman felt that the IFFPA and IFPI submissions dealing with relevant international jurisprudence would be of great value in deciding the case.

The judgment of the British Columbia Court of Appeal was delivered by Justice Groberman with Justices S. David Frankel and David C. Harris concurring on June 11, 2015 ( Equustek Solutions Inc. v. Google Inc. , 2015 BCCA 265). The court dismissed the appeal, finding that the lower court had jurisdiction and did not violate any principles of granting injunctions. The court also found that no norms of freedom of speech had been violated. Justice Groberman affirmed the lower court’s conclusion of a real and substantial connection between Google’s business undertakings and British Columbia as the basis for asserting jurisdiction:

While Google does not have servers or offices in the province and does not have resident staff here, I agree with the chambers judge’s conclusion that key parts of Google’s business are carried on here. The judge concentrated on the advertising aspects of Google’s business in making her findings. In my view, it can also be said that the gathering of information through proprietary web crawler software (“Googlebot”) takes place in British Columbia. This active process of obtaining data that resides in the province or is the property of individuals in British Columbia is a key part of Google’s business (para 54).

Google’s defense to this was to assert that the business of the underlying injunction does not take place within British Columbia; so, the injunction was improperly granted. As has already been pointed out, Google did comply with removing the Canadian sites and access within Canada.

As to the question of Google being a non-party to the underlying litigation, the court provides ample discussion and concludes that “Canadian courts have ... long recognized that injunctions aimed at maintaining order need not be directed solely to parties to the litigation” (para 77). Justice Groberman asserts that as long as there is a justiciable issue between the litigants, “the granting of injunctive relief against third parties as an ancillary means of preserving the parties’ rights is a well-established jurisdiction of courts” (para 80). Worldwide Mareva injunctions are well established in British Columbia. The court stressed that comity was important insofar as the importance of the freedom of expression should never be underestimated nor interfered within a foreign country, and therefore, the court should always be extremely cautious in making such decisions. However, there is ample precedence of other jurisdictions that have issued orders with international effects to deal with Internet abuses.

On February 18, 2016, the Supreme Court of Canada granted leave to appeal the judgment of the British Columbia Court of Appeal (Google Inc. v. Equustek Solutions Inc., et al., 2016 CanLII 7602 (SCC)). Oral arguments were heard on December 6, 2016. A webcast of the proceedings is available online1 . The complete list of factums is also available online2 . Interveners to the Supreme Court were the OpenMedia Engagement Network, British Columbia Civil Liberties Association, Wikimedia Foundation, Attorney General of Canada, IFPI, Human Rights Watch, Attorney General of Ontario, CLLA, Reporters Committee for Freedom of the Press, EFF, and IFFPA.

Michael Geist was in attendance and live tweeted the proceedings. His tweets can be read online3 . Google makes the case that applying an injunction to it doesn’t necessarily solve the problem because there are other search engines. However, none is even close to being as frequented or as successful as Google, which leads to the question of whether Google was a victim of its own success. Google also asserted that court orders could target legitimate free speech at other instances.

The Attorney General of Canada stated that British Columbia Courts go too far with extra-territorial jurisdiction. Equustek asserted that if no jurisdiction was asserted, the Internet would simply become a lawless zone. In the Attorney General of Canada’s factum, he states that “The Internet has not altered traditional understandings of state jurisdiction and international law, including as it relates to extraterritorial enforcement jurisdiction” (para 32). Another issue is how long the injunction was to last and whether there should be a time limit imposed so that Google was not responsible indefinitely.

Both the IFPI and IFFPA support the order being extra- territorial as they assert that this is the only way to ensure that the order is effective. The IFFPA insists that while it is supportive of the freedom of expression, it is important to remember that this is a trade secrets case. This argument could speak well to any test going forward having a very narrow focus of what qualifies for similar injunctions.

The factum from the Wikimedia Foundation may best sum up why this case should be of interest to anyone doing business on the Internet:

Just as the British Columbia Court of Appeal took notice of ... European decisions ..., courts around the world will be looking to the well-respected Supreme Court of Canada for reasoned guidance on whether global orders should ever be issued at all, and if they are to exist, what criteria should be applied to meaningfully give effect to the free speech rights of speakers and listeners, both in Canada and in the rest of the world. (para 22)

The EFF also focused attention on Internet users’ rights, freedom of speech, and IP rights. Michael Geist’s final tweet about the hearing ended with “No idea where the court is heading on this.”

For now, it is a waiting game until the judgment is handed down. However, the Canadian Supreme Court rules, the questions of how to regulate information on the Internet and how to enforce legal actions worldwide, are the ones that every country will have to grapple with. Is this another case of insisting that Internet service providers and search engines become the Internet police? Is this a simple case of the cost of them doing business? There is ample precedence to support including non-parties to the central litigation being subject to court orders, but it is also clear that there should be some better parameters in place to protect rights such as the freedom of speech and to prevent abuses of the system.

1. http://www.scc-csc.ca/case-dossier/info/webcastview-webdiffusionvue-eng.aspx?cas=36602&urlen=http%3a%2f%2fcivic.neulion.com%2fsccen%2fliveembed.php%3fclipid%3d3495286%2c000&urlfr=http%3a%2f%2fcivic.neulion.com%2fsccfr%2fliveembed.php%3fclipid%3d3495294%2c000&date=2016-12-06.
2. http://www.scc-csc.ca/case-dossier/info/af-ma-eng.aspx?cas=36602.
3. https://storify.com/mgeist/google-v-equustek-the-supreme-court-of-canada-hear.

Disclaimer – The views expressed in this article are the personal views of the author and are purely informative in nature.

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