The borderless nature of the
internet has caused courts all over the world to address thorny questions
dealing with their jurisdiction. On June 13, 2014, the Supreme Court of British
Columbia joined those ranks in its decision in Equustek
Solutions Inc. v. Jack,
2014 BCSC 1063. Madam Justice
Fenlon ordered Google to block a website selling products that were made in
violation of trade secrets.
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| Image by mikeleeorg |
The Plaintiff manufactures networking devices that allow
interoperability between industrial equipment made by different manufacturers.
The underlying action is based on the Plaintiff’s contention that the
Defendant, a former distributor of the networking device, conspired with one of
the Plaintiff’s employees to make and market a competing product based on the
same technology.
In the main action, the Court made an interim order restraining the
Defendants from carrying on business in B.C. through any website. This is where
Google comes in. The Plaintiff sent Google several requests to take down a number of URLs on
which they alleged the Defendant was marketing the infringing product. Google acceded
to each one taking down 345 individual web pages but refused to take down an
entire category of URLs. The Plaintiff brought an application for an interim
injunction against Google, ordering them to stop indexing a category of URLs
identified by the Plaintiff.
Google argued that the B.C. Supreme Court had no jurisdiction over it
because it has no real and substantial link with the forum. Google also argued
that even if the Court does have jurisdiction, the injunction should not issue
because: 1) “it would amount to a worldwide order that could not be enforced”;
and 2) It would pose an undue burden on Google’s business operations. Madam
Justice Fenlon dismissed all of these arguments and granted the injunction.
Jurisdiction
On the matter of jurisdiction, the Court referred to the controlling law
in B.C., the Court
Jurisdiction and Proceedings Transfer Act, which essentially codifies
the principles of private international law set out by the Supreme Court of
Canada in numerous decisions. S.10 of the law lists a number of connecting factors
a court is to consider when deciding whether to assert jurisdiction over a
person. Justice Fenlon found that two of the factors were applicable in this
case:
- 10(a) - the application was “brought to enforce, assert, declare or determine proprietary or possessory rights or a security interest in property in British Columbia that is immovable or movable property…”; and- 10(h) - the application “concerns a business carried on in British Columbia”.
The Court acknowledged that since most of the sales of the infringing
product occurred outside of B.C., the s.10(a) factor, though applicable, was
weak. Most of the Court’s energy is spent dealing with the question of whether
Google carries on business in B.C. in the meaning of s.10(h).
Google’s argument that it does not carry on business in B.C. was based
heavily on the Supreme Court’s ruling in Club
Resorts Ltd. v. Van Breda, 2012 SCC 17. In that case, two Ontario
residents were seriously injured (one died) while at a resort in Cuba. The
Supreme Court confirmed the decisions of the Courts below in ruling that the
Ontario Superior Court of Justice had jurisdiction over the claims because the
contract between the parties was entered into in Ontario. The part of that
decision that interested Google was where Justice LeBel said that “The notion
of carrying on business requires some form of actual, not only virtual,
presence in the jurisdiction, such as maintaining an office there or regularly
visiting the territory of the particular jurisdiction.”
The Court pointed out that Google
failed to cite the very next sentence in which Justice LeBel admits that the
comment above was made in obiter. Justice Fenlon distinguished the current case
from Van Breda on the grounds that
unlike that case, the current matter deals with e-commerce. Still, the Court
agreed with the proposition that the mere fact that a person in B.C. can access
a website does not automatically mean that the owner of the website is carrying
on business in the Province.
In order to determine whether
Google is carrying on business in B.C., the Court turned to assessing the
nature of Google’s service. The prevailing jurisprudence in the United States
(which has been cited with approval by Canadian courts. see Braintech, Inc.
v. Kostiuk, 1999 BCCA 169 [Braintech], Pro-C Ltd. v. Computer
City Inc., [2000] O.J. No. 2823 (S.C.J.)) makes a distinction between
active and passive websites. Passive websites are information based, offer
little interactivity and tend to have a local focus. By contrast, active sites tend
to be highly interactive, e-commerce oriented and multi-jurisdictional in focus.
Despite Google’s claim that the
Google.ca search website is passive, the Court found that it was active. In
addition to the fact that Google’s website has an international reach, Justice
Fenlon honed in on the fact that when a person begins to type in the Google
search bar, the website automatically anticipates the search request by serving
up a list of potential search terms. She also noted that Google offered its
advertising services to B.C. businesses (including the Defendants in the main
action) and served ads to B.C. residents.
Google’s other arguments on why the injunction should not issue
An injunction is an extraordinary
remedy that should only be granted if there is no other satisfactory remedy
available at law. Google argued that there was another remedy available, namely
to continue providing Google with takedown requests as they come. The Court disagreed.
Given the fact that Google had already de-indexed nearly 350 URLs to no effect,
the Court did not feel that forcing the Plaintiff to continue with this
approach was an effective remedy.
On this point, the Court cited a
French decision, Max Mosely v. Google France SARL and Google Inc., in which Google was forced to block images
from its image search results. In that case, Rupert Murdoch’s News of the World
secretly filmed Max Mosely engaging in sexual conduct. In a criminal trial, the
newspaper was found guilty. At this point, however, the images were so widely
circulated that one could find them by doing a simple Google search. As in the
present case, Mosely asked Google to take down specific URLs and Google
complied. The French court ordered Google to block the images entirely finding
Google’s takedown process to be ineffective.
Google made arguments as to the enforceability of a B.C. Court order
against them. Google is a Delaware Corporation based in California.
Traditionally, injunctions are not issued against parties that reside outside
of the Courts jurisdiction. The reason for this is simple: breaching the terms
of an injunction amounts to contempt of court. Contempt is usually punished by
fines and/or imprisonment. It is hard to enforce these measures against a party
that does not reside or have any property located in a jurisdiction.
While she did not address this point decisively, Justice Fenlon noted a
recent trend of courts enforcing interlocutory injunctive orders made in other jurisdictions.
She cites Cavell Insurance Co. Ltd. (Re) and Minera Aquiline
Argentina SA v. IMA Exploration Inc. in which the Ontario Court of Appeal
and the B.C. Court of Appeal respectively enforced or endorsed the enforcement
of foreign interlocutory orders. She also noted that the Court could get
creative should Google refuse to follow the order. For example, the Court could
bar Google from undertaking any legal actions in the Province until the order
is complied with.
Google also argued that an
injunction should not be made against a person that is not a party to the main
action. This general rule has two exceptions: 1) when the non-party knowingly
disobeys the court order; and 2) when granting the injunction will “aid in the
fact finding necessary to the administration of justice”. This second exception
is what is often referred to as a Norwich order and is based on the U.K. House
of Lords decision in Norwich Pharmacal Co. & Ors v Commissioners of
Customs and Excise.
The first exception obviously does not apply. Google argued that the Norwich
line of cases should not be read to extend so far as to allow a court to
restrain the conduct of a non-party. They argued that a court should only be
allowed to compel an innocent party to produce documents for discovery purposes.
The Court disagreed.
While the Norwich case does not set a precedent for the kind of
order sought in this case, Justice Fenlon makes clear that her equitable
jurisdiction is not fettered by precedent. Courts of inherent jurisdiction are
granted a broad discretionary power to award equitable remedies to ensure that
justice is served. While Google is right that this order goes beyond the reasoning
in Norwich, this does not seem to faze Justice Fenlon.
Thoughts
This is an important decision that may prove to affect a wide-range of
areas, not the least of which being intellectual property. While the IP rights
at the heart of the main action were not important to the Courts reasons here, this
case stands for the proposition that ISPs may be compelled to take down
infringing content when they are not a party to the action. These reasons represent
the continuing shift of courts adapting the law to the borderless internet.
Classifying Google’s website as active seems to me to be the right
decision. Search engines are nothing if not interactive. By their very nature
they require the interaction of an individual to perform their function. The
fact that Google’s advertising division services B.C. businesses and serves ads
to B.C. residents in a targeted fashion also militates in favour of a finding
that Google’s website is active in nature.
One of Google’s arguments was essentially a lament that if the Court
ruled against them, it would be a statement to the effect that an
internationally used service like Google could be dragged into court anywhere
in the world. I certainly understand their perspective. It is precisely that
type of eventuality that the rules of international private law seek to avoid.
That said, it seems that at least one judge is unwilling to let such trifling
matters stand in the way of Equity!
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