Unenforceability in the U.S. a Non-Starter When Google Returns to the BC Supreme Court

In the most recent development in the judicial saga surrounding the decision of the Supreme Court of Canada in Google Inc. v. Equustek Solutions Inc.,1 Google’s continuing efforts to oppose the extraterritorial scope of the injunction rendered against it by the Supreme Court of British Columbia have been thwarted (the “Canadian injunction”). This injunction was granted against Google in a counterfeit litigation involving Equustek. Google was not a party to the action, its involvement in the file being linked to its intermediary role as a search engine referring users to the defendant’s websites. 

The injunctive order against Google, confirmed in June 2017 by the Supreme Court of Canada, requires it to de-index illegal content from its search engine, not only for google.ca, but for all Google sites throughout the world. The reasons underlying this injunction were principally the following: the websites were operating in violation of previous court orders and were marketed products allegedly developed through theft of trade secrets. In so doing, the Supreme Court of Canada confirmed the jurisdiction of Canadian courts to issues orders with extraterritorial effects where it is necessary to ensure the injunction’s effectiveness.2 

However, approximately one month after the Supreme Court’s decision, Google contested the application of the injunction in California, on the basis that it was unlawful and unenforceable in the United States.3 The U.S. District Court for the Northern District of California seized of the file declared that it was indeed not enforceable in the country in a final ruling issued on December 14, 2017 (the “California Judgment”). In this decision, the Court found that the injunction made Google liable as a publisher or speaker, which was contrary to a U.S federal statute protecting providers of interactive services.

Armed with the California Judgment, Google turned again to the Canadian Courts and applied to the Supreme Court of British Columbia to set aside or vary the Canadian injunction. In its application, Google was attempting to prevail itself of the opening left by the Supreme Court’s judgment allowing a party to raise the incompatibility of the order with the laws of another jurisdiction.4 The argument was rooted in the findings of the U.S. District Court. Google argued that the Canadian injunction should be set aside or varied since the California Judgment found that it was offensive to U.S. core values.

Google took the position that its right of free speech, in particular its right to decide to which websites it will link, is a right distinct from the content, objectionable or not, that may appear on those websites. It relied on the California Judgment and its finding that the U.S. Federal Statute, the Communications Decency Act (the “CDA”) which provides for a protection for internet intermediaries from liability for the content on their services, renders the Canadian injunction contrary to U.S. law and “undermines the policy goals of CDA and threatens free speech on the global internet”. While the U.S. District Court did not address the question of whether the injunction was an infringement of Google’s right of free speech guaranteed by the First Amendment of the U.S. Constitution, before the BC Court, Google argued that the CDA is based on First Amendment principles as it is intended to promote freedom of expression.

In April, the BC Court rendered a judgment in the matter of Equustek Solutions Inc. v. Jack5 dismissing this application. 

In its decision, the BC Court determined that the only circumstance which would justify a reconsideration of the injunctive order is the opening left by the Supreme Court of Canada allowing Google to apply to vary on the basis of evidence that the injunction would “require it to violate the laws of another jurisdiction, including interfering with freedom of expression”.

Despite Google’s argument that the U.S. District Court found that the injunction violates core American values by interfering with freedom of speech, the Court found that the California Judgment does not establish that the injunction requires Google to violate American law. De-indexing the websites may limit the exercise of Google’s rights, but the fact that a party is restricted in its ability to exercise certain rights is not the same thing as that party being required to violate the law. The Court concluded that only this latter situation, a violation of the law, is contemplated by the Supreme Court of Canada’s decision.

The Court recognizes that its decision is one of principle: it recognizes that the effect of the U.S ruling is that no action can be taken against Google to enforce the injunction in the United States, but importantly states that this fact does not mean that Canadian Courts are restricted in their ability to protect the integrity of their own process through orders directed at parties over whom they have personal jurisdiction.6

This decision should be of interest in particular for internet intermediaries outside Canada, many of whom are situated in jurisdictions that provide for safe harbour regimes similar to that provided for in the CDA. Due to the distinction drawn between a restriction on rights under a foreign law and the violation of that law, this type of statutory protection or defence may have limited effect when arguing for a limitation on the extra-territorial scope of an order of a Canadian Court. As a result, a foreign party could find itself in a position where it is subject to an order with which it cannot legally comply, requiring it to follow Google’s example and apply to the Courts of its home jurisdiction to declare a Canadian order unenforceable.

1 2017 SCC 34.
2 For further discussion on this point and on the history of this matter see Danielle Ferron’s August 7, 2017 article: http://langlois.ca/injunction-extraterritorial-effect-non-party-google-inc-v-equustek-solutions-inc-decision.
3 Discussed in Danielle Ferron’s January 22, 2018 article: http://langlois.ca/new-developments-matter-google-inc-v-equustek-solutions-inc.

4 2017 SCC 34 at para. 46.
5 2018 BCSC 610.
6 Par. 22.

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