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CIVIL PROCEDURE - Interlocutory injunctions - Circumstances when granted - Considerations affecting grant - Balance of convenience - Irreparable injury - Form and operation of order - Extraterritorial operation

Wednesday, June 28, 2017 @ 3:16 PM  


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Appeal by Google Inc. (Google) from a judgment of the British Columbia Court of Appeal affirming an interlocutory injunction granted against Google in the respondents’ favour. The respondent Equustek Solutions Inc. (Equustek) was a small technology company in British Columbia. It manufactured networking devices that allowed complex industrial equipment made by one manufacturer to communicate with complex industrial equipment made by another manufacturer. Equustek claimed that another company, Datalink Technologies Gateways Inc. (Datalink), while acting as a distributor of Equustek’s products, began to re-label one of the products and pass it off as its own. Equustek also claimed that Datalink acquired confidential information and trade secrets belonging to Equustek, using them to design and manufacture a competing product, the GW1000. Any orders for Equustek’s product were filled with the GW1000. Consequently, in 2011, Equustek terminated the distribution agreement it had with Datalink. Datalink subsequently failed to comply with court orders which, among other things, prohibited it from referring to Equustek or any of Equustek’s products on its websites and required it to post a statement on its websites informing customers that Datalink was no longer a distributor of Equustek products. Datalink continued to carry on its business from an unknown location, selling its impugned product on its websites all over the world. Further court proceedings by Equustek against Datalink and its principal proved to be ineffective, as well as steps taken by Google, a non-party, to de-index specific webpages associated with Datalink. Equustek discovered that Datalink simply moved the objectionable content to new pages within its websites, circumventing the court orders. The de-indexing also did not have the necessary protective effect since Google had limited the de-indexing to searches conducted on google.ca. Accordingly, Equustek sought and obtained an interlocutory injunction enjoining Google from displaying any part of the Datalink websites on any of its search results worldwide. The British Columbia Court of Appeal dismissed Google’s appeal, concluding that the Court had in personam jurisdiction over Google and could therefore make an order with extraterritorial effect. The Appeal Court also upheld the lower court’s ruling that courts of inherent jurisdiction could grant equitable relief against non-parties. It further found that upholding the interlocutory injunction against Google was the only practical way to prevent Datalink from flouting court orders and that there were no identifiable countervailing comity or freedom of expression concerns that prevented such an order from being granted.

HELD: Appeal dismissed. Equustek had met the three-part test for the granting of an interlocutory injunction set out in the RJR-MacDonald decision: there was a serious issue to be tried; irreparable harm would result if the injunction were not granted; and the balance of convenience favoured granting the injunction. It was just and equitable for the Court to grant the worldwide interlocutory injunction in all of the circumstances of the case. Google’s submission that non-parties could not be the subject of an interlocutory injunction was contrary to prior jurisprudence. The interlocutory injunction in this case flowed from the necessity of Google’s assistance in order to prevent the facilitation of Datalink’s ability to defy court orders and do irreparable harm to Equustek. Without the injunctive relief, it was clear that Google would continue to facilitate that ongoing harm. The lower courts properly concluded that because Google carried on business in the province through its advertising and search operations, this was sufficient to establish the existence of in personam and territorial jurisdiction. When a court had in personam jurisdiction, and where it was necessary to ensure the injunction’s effectiveness, it could grant an injunction enjoining that person’s conduct anywhere in the world. Given that the majority of the GW1000 sales occurred outside of Canada, it was necessary for the interlocutory injunction to have worldwide effect. If the injunction were restricted to Canada alone or to google.ca, the remedy would be deprived of its intended ability to prevent irreparable harm. Purchasers outside Canada would be able to continue purchasing from Datalink’s websites, and Canadian purchasers would be able to find Datalink’s websites even if those websites were de-indexed on google.ca. The injunction’s worldwide effect did not tip the balance of convenience in Google’s favour. Google’s argument that a global injunction violated international comity because it was possible that the order could not have been obtained in a foreign jurisdiction, or that to comply with it would result in Google violating the laws of that jurisdiction, was theoretical. If Google had evidence that complying with the injunction would require it to violate the laws of another jurisdiction, including interfering with freedom of expression, it is was free to apply to the British Columbia courts to vary the interlocutory order accordingly. Google had made no such application. In the absence of an evidentiary foundation, and given Google’s right to seek a rectifying order, it would not be equitable to deny Equustek the extraterritorial scope it needed to make the remedy effective, or even to put the onus on it to demonstrate, country by country, where such an order was legally permissible.

Google Inc. v. Equustek Solutions Inc., [2017] S.C.J. No. 34, Supreme Court of Canada, B. McLachlin C.J. and R.S. Abella, M.J. Moldaver, A. Karakatsanis, R. Wagner, C. Gascon, S. Côté, R. Brown and M. Rowe JJ., June 28, 2017. Digest No. TLD-June262017011SCC