What is a Court to do when faced with repeated breaches of Court orders by a virtual entity? In the case, Equustek Solutions Inc. v. Jack, 2014 BCSC 1063, the decision of the BC Supreme Court was to order an innocent third party, Google Inc., to remove the wrongdoer’s website from further search results – anywhere.
The case has far reaching implications on the ability to enforce injunctions on wrongdoers in cyberspace, on the role of innocent third parties such as Google, and on the possibility of the Court process being used as an avenue for censorship. The decision has been appealed so the British Columbia Appeal Court will also get an opportunity to consider these difficult issues.
The plaintiffs manufacture networking devices that allow complex industrial equipment made by one manufacturer to communicate with equipment made by other makers. They claim certain defendants misused trade secrets of the plaintiffs to design a competing product and passed off that product as that of the plaintiff. The plaintiff obtained a number of court orders which the defendants did not comply with. The defendants continue to advertise and sell their product but now as what the Court described as a ‘virtual company’, a series of websites. The defendant’s websites were the subject of further Court orders prohibiting the defendants from carrying on business under any website. The defendants continued to act in violation of those Court orders.
In the face of the continued violation of the Court orders the plaintiff sought an interim injunction restraining the non-party, Google Inc., from including the defendants’ websites in search results generated by Google’s search engines.
Google voluntarily removed specific webpages from its .ca search results in response to the 2012 Court order against the defendants but opposes being ordered to block an entire category of URLs from its search results worldwide.
The Court had to address the preliminary issue of whether it had jurisdiction over Google, not physically present in BC. Google opposed the application of jurisdiction over its operations and also argued that if the Court were to find it had jurisdiction then the order should not be granted as it would amount to a worldwide order that could not be enforced and because it was be an unwarranted intrusion into Google’s lawful business activities.
The Court noted that deciding whether jurisdiction should be assumed in a case with inter-jurisdictional aspects is a complex question and especially challenging in the context of the internet. After considering jurisprudence from the BC Court of Appeal and the Supreme Court the BC Superior Court held that “proof on a balance of probabilities is the appropriate standard on this application because the jurisdictional ruling is a final one vis à vis the applicant and respondent. However, that standard should be applied while recognizing that the plaintiffs have had a limited opportunity to marshal supporting evidence.”
In BC the substantive issue required consideration of the Court Jurisdiction and Proceedings Transfer Act, S.B.C. 2003, c. 28 which codified and replaced the common law on the subject. The CJPTA requires an assessment of whether there is a real and substantial connection between the fact on which a proceeding against a person is based and BC. Weighing the applicable factors the Court noted that the effort to protect the plaintiff’s intellectual property (trade secrets in this case) was a weak connecting factor but the fact that Google carries on business in BC was a stronger connecting factor. After struggling with the unique challenges posed by the internet and Google’s virtual presence in BC, the Court found Google’s search service is not a mere passive website noting Google sells ads to BC parties. The Court also considered the González decision of the Spanish Data Protection Agency finding Google’s advertising activities and search activities are inextricably linked and came to the same conclusion. The Court rejected Google’s concern that it could, on this analysis be subject to the jurisdiction of every state in providing worldwide services.
In the end the Court found that it had territorial competence over Google on the application.
The Court then considered if BC was the most convenient forum to make the decision, noting that “the burden falls on Google to show why the Court should decline to exercise its jurisdiction and displace the forum chosen by the plaintiffs”. The Court found that Google’s proposed voluntary blocking of the states websites by Google Canada was not adequate. The Court also considered whether California was a more convenient forum including consideration that a California court order is easier to enforce in California than a British Columbia court order, but in the end found California was not a more appropriate forum than British Columbia for adjudicating the plaintiffs’ application for an interim injunction against Google.
The Court considered if it should make this order against a non-party, Google. The Court examined exceptions to the principle that a Court does not have authority to make an order against a non-party who owes no duty to the plaintiff. The Court noted this was not a case where Google had sought to flout a Court order.
Noting that the second exception that a Court may issue “orders made against non-parties to aid in the fact finding necessary to the administration of justice” (such as the Norwich line of cases), the Court rejected Google’s position “that the Court only has authority to make an order against a non-party in relation to contempt or to further fact finding necessary to effect justice”, instead noting that the Court has “inherent jurisdiction to maintain the rule of law and to control its own process” and that “the power to grant injunctions is a broad one”. The Court went on to examine how Mareva style injunctions were first granted in Canada and the extra-territorial nature of such orders.
As a result, Madam Justice Fenlon found “that the Court has authority to grant an injunction against a non-party resident in a foreign jurisdiction in appropriate circumstances”. Having found subject matter competence the Court considered Google’s arguments for not making the order including:
- Google provides “an important and valuable tool for navigating hundreds of trillions of webpages on the internet. Google argues it cannot, as a practical matter, monitor content or arbitrate disputes over content because of the enormous volume of content; because it cannot determine whether information is inaccurate or lawful; and because content on websites is constantly changing so even if Google could form judgments about the content of sites on its index at any given moment, those judgments would be obsolete moments later”;
- Concern over unfairness of “de-indexing entire websites without regard to content of the specific URLs would constitute undue censorship”;
- Concern that the worldwide nature of the order may force Google to do something that might violate a law elsewhere; and
- Concern that the order sought is too broad and “no court should make an order that has a reach that extends around the world”.
The Court considered and addressed each of these arguments applying the test of a strong prima facie case (or a good arguable case) to cross the threshold and then to balance the parties interests seeking to reach a just and convenient result. The Court also considered the Norwich factors adding a factor – the degree to which the interests of those other than the applicant and the non-party could be affected by the order.
In conclusion, the Court granted a 14 day interim injunction under which “Google Inc. is to cease indexing or referencing in search results on its internet search engines the websites” of the defendants.
While discussed, it is not clear if the final form of the order would include the so-called Baltic proviso that would excuse Google from compliance with the order if doing so would breach local laws. As well there was no mention of whether the final form of the order would require the plaintiff to indemnify Google for costs it may be exposed to as a result of the order (one of the Norwich factors).
And so it begins. As noted the decision has been appealed. There are other interests to be considered. This appears to be the first time a Court has ordered the blocking of entire websites, not just individual posts.
As well if a BC court has this right then why not another Canadian or foreign court also who may see the need for content controls for other purposes. The issue of limits on “free speech” is properly difficult and should continue to be so. The appeal of the decision may well enlighten the debate on whether any court should have such a sweeping power, the safeguards on how it should be exercised and the burden placed on the innocent third parties. In that debate one might recall the decision of the US Supreme Court in Reno v. American Civil Liberties Union 117 S. Ct. 2329, 1997 (U.S. S.C.) in looking at content controls under a legislative scheme:
As a matter of constitutional tradition, in the absence of evidence to the contrary, we presume that governmental regulation of the content of speech is more likely to interfere with the free exchange of ideas than to encourage it. The interest in encouraging freedom of expression in a democratic society outweighs any theoretical but unproven benefit of censorship.