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What Canadian Supreme Court's Landmark Decision Means for Tech Companies Big and Small

What should courts do when one country’s laws collide with a borderless Internet? Last week, the Supreme Court of Canada became the latest court to tackle the issue, upholding an order for Google to de-index globally from its search results all websites belonging to a defendant accused of selling counterfeit goods. This decision, Google v. Equustek Solutions, is a major development in a controversial, and possibly harmful, trend of courts issuing orders with worldwide reach.

Background

Equustek is a Canadian company that manufactures networking devices that interface between complex industrial equipment. It filed suit against a former distributor, Datalink, alleging that the distributor was passing off Equustek’s devices as its own and using Equustek’s trade secrets to design and manufacture a competing product. The lower court issued an injunction against Datalink, ordering the distributor to return the plaintiff’s proprietary information and to stop referring to Equustek’s products on its website. At some point, Datalink left Canada but continued to sell its “impugned product” to customers around the world from unknown locations.

Because Datalink had absconded, Equustek asked Google, a non-party, to de-index the Datalink website. Google voluntarily took down specific URLs that linked to the defendants’ products, but it also limited its de-indexing to searches originating from the Canadian “google.ca” domain. Because most purchases of Datalink’s product originated outside Canada, and because Canadian users could simply type in the URL of a different country’s Google homepage, Equustek applied for, and the court granted, a worldwide injunction against Google. The injunction ordered Google to “cease indexing or referencing in search results on its Internet search engines” all Datalink websites “until the conclusion of the trial of this action or further order of this court.”

The Court of Appeal affirmed, setting aside Google’s arguments that a global injunction would violate rules of comity and threaten freedom of expression. The Court of Appeals held that courts can enjoin non-parties worldwide, especially if doing so is the “only practical way” to prevent Datalink from ignoring the court’s order.

The Supreme Court’s Decision: “We are dealing with the Internet after all”

In a 7-2 decision, the Supreme Court of Canada agreed with the decisions below. While much of the opinion focused on the contours of Canadian procedure, the critical part for Internet companies addressed the global scope of the injunction against Google.

The Supreme Court rejected Google’s arguments that, as a non-party, it should not be subject to any injunction and that a worldwide injunction is beyond the scope of a national court. The Court disagreed, reasoning that, because Datalink would not be commercially viable without Google’s search results, Google was “facilitating Datalink’s breach… by enabling it to continue carrying on business through the Internet.” And it held that a worldwide injunction was necessary because the only way to ensure that an injunction is effective was to apply it worldwide: “Internet has no borders — its natural habitat is global.” Noting that Google regularly removes search results (for instance, based on allegations of child pornography or claims of copyright infringement), the Court also found that complying with a worldwide injunction did not impose any serious burdens on Google.

The Court also rejected Google’s arguments that a global injunction violates international comity and hinders freedom of expression. Dismissing the notion that a de-listing order may run afoul of laws in other jurisdictions, the Court found that any such argument was “theoretical” because most countries likely view the sale of “pirated” products as a legal wrong. It then explicitly put the burden on non-party Google to seek modification of the order if it discovers a conflict with another jurisdiction’s laws. “It hardly seems equitable,” the Court wrote, “to put the onus on [Equustek] to demonstrate, country by country, where such an order is legally permissible.” In the Court’s view, the global reach of the Internet warranted global relief: “We are dealing with the Internet after all, and the balance of convenience test has to take full account of its inevitable extraterritorial reach when injunctive relief is being sought against an entity like Google.”

Importance

The Canadian Supreme Court’s Equustek decision is both significant and troubling. It is yet another step in an increasing trend among courts ordering Internet companies to remove material from their sites and services everywhere in the world. Several courts across the globe have required Google to remove search results, including the Court of Justice of the European Union in Google Spain SL v. AEPD, Mario Costeja Gonzáles (the famous “right to be forgotten” case). And Equustek marks the first time a national high court had mandated de-indexing worldwide.

The implications of these decisions extend far beyond search engines. For example, a court in a given jurisdiction might issue a worldwide injunction against a social media company commanding it to prevent users from sharing “indecent” pictures or “insulting” statements. One country could order a video sharing site to remove a video that it considers “blasphemous”—a video that is likely constitutional in the United States. Another jurisdiction might make a social networking platform take down photographs of famous nude paintings uploaded by its users, leaving the company in a bind when a French court suggests that it must keep them up.

Importantly, the Equustek decision puts Google, a non-party to the underlying action, in the position of determining how to reconcile inconsistencies between laws of different nations—particularly as there is no international tribunal competent to review the decisions of any individual nation’s high court. But just because courts may be comfortable burdening large companies with this onerous task does not make this a prudent precedent: unfortunately, for many smaller intermediaries and startups without the resources of a Google, it may be easier to err on the side of taking down or blocking material, resulting in an Internet where the only expression available is that which the most restrictive regime allows.

*Adi Kamdar is a summer associate in Fenwick's litigation group.​​​