Google ordered by BC court to block websites: Equustek Solutions Inc. v. Jack (Updated)

July 23rd, 2014 by Barry Sookman Leave a reply »

In an important decision rendered on June 13, 2014, a Canadian court ordered Google to block a website that was selling goods that violated the trade secrets of the plaintiffs. The plaintiffs obtained a default judgment against the defendants. But, the defendants continued to sell the offending goods over the Internet. The plaintiffs, unable to enforce their judgment, asked for Google’s help in blocking the website. Google voluntarily de-indexed specific URL’s requested by the plaintiffs, but this “whac-a-mole” process was ineffective. When Google refused to de-index the offending websites from its search results, the plaintiffs brought a motion against Google for interim relief requiring Google to de-index the websites. Over Google’s objections, in Equustek Solutions Inc. v. Jack 2014 BCSC 1063, Madam Justice Fenlon of the British Columbia Supreme Court granted the injunction.

Google subsequently applied for leave to appeal the decision to the Court of Appeal and for an order staying the enforcement of the order. In reasons delivered on July 23, 2014 in Equustek Solutions Inc. v. Google Inc.,  2014 BCCA 295, the court granted Google leave to appeal the decision but refused Google’s application to stay enforcement of the injunction order. 

The decision made several important findings related to enforcing rights online including that:

  • the court had territorial jurisdiction over Google
  • the court had the jurisdictional competence to make a blocking order under its broad equitable jurisdiction even if it would have extra-territorial effects
  • URL blocking was not as effective as website blocking
  • the balance of convenience favored granting a blocking order to assist the plaintiffs in enforcing their judgment against defendants who continued to violate their intellectual property rights

The following is a summary of some of the important reasons given in the decision. Google Inc (“Google”)  claimed, among other things, that by merely operating on the Internet it was not subject to the territorial jurisdiction of the BC court. The court rejected this contention, relying, in part on the recent Google right to be forgotten case (Google v AEPD CJEU Case C‑131/12 13 May 2014) where Google made and lost the same argument. The court acknowledged that there would likely not be territorial jurisdiction over a purely passive website. However, Google’s search and advertising businesses which are closely linked together could not be so characterized.

 [47] Google submits that it merely offers a passive website to residents of British Columbia who wish to search the internet. It argues that its programs automatically generate search results without Google being actively involved in the particular search. Paragraph 23 of Google’s written submissions state: [23] … Google’s internet search engine allows users to enter key-words and then Google generates a list of results in a specific ranked order. Google’s search results are computer generated through the use of Google’s highly confidential and proprietary algorithm and methodology. Google’s web crawler program (referred to as “Googlebot”) reviews the content that is available on trillions of webpages or URLs over the internet. Search results are generated based on that content [within seconds].

[48] I conclude that Google’s internet search websites are not passive information sites. As a user begins to type a few letters or a word of their query, Google anticipates the request and offers a menu of suggested potential search queries. Those offerings are based on that particular user’s previous searches as well as the phrases or keywords most commonly queried by all users. As James Grimmelman writes in “The Structure of Search Engine Law” (2007-2008)93 Iowa L Rev 1 at 10-11: Search engines are also increasingly learning from the large volumes of query data they have accumulated. A user’s history of queries can provide useful information about her probable intentions — for example, whether she tends towards navigational or transactional queries. Similarly, search engines gain useful feedback into their own successes and failures by seeing which results users click on or by noticing long strings of searches on related terms, which may indicate that the user is having trouble finding what she’s looking for.

[49] Google collects a wide range of information as a user searches, including the user’s IP address, location, search terms, and whether the user acts on the search results offered by “clicking through” to the websites on the list.

[50] In addition to its search services, Google sells advertising to British Columbia clients. Indeed, Google entered into an advertising contract with the defendants and advertised their products up to the hearing of this application. Google acknowledges it should not advertise for the defendants and filed an affidavit explaining its inadvertent failure to suspend the defendants’ Google account prior to the hearing.

[51] Although Google’s advertising business is marketed in Canada by Google Canada, British Columbia residents who wish to advertise on Google’s webpages contract directly with Google and make payments directly to Google. Although those contracts stipulate that disputes will be governed by California law and adjudicated in California courts, the “choice of laws” provision in those contracts does not alter the fact that Google is carrying on a business in this province through advertising contracts with British Columbia residents….

[65] In summary on this issue, I conclude that the Court has territorial competence over Google on this application.

Google also asserted that the court did not have the subject matter competence to make the order, an order it claimed had never been made before in Canada. It claimed the order could not be made against a non-party to the main action. It also claimed it would require the court to make an order with worldwide effect. The court found the jurisdiction to grant the order based on s. 39 of the Law and Equity Act. Under this Act, injunctions may be issued in “in all cases in which it appears to the court to be just or convenient that the order should be made … on terms and conditions the court thinks just”. This jurisdiction had long been used to grant orders including in some cases extra-territorial orders against non-parties in other types of cases such as Norwich orders (derived from the well known decision in Norwich Pharmacal Co. and Others v. Customs and Excise Commissioners, [1974] A.C. 133) and Mareva injunctions (derived from the well decision in Mareva Compania Naviera S.A. v. Int’l Bulkcarriers S.A., [1980] 1 All E.R. 213). After reviewing the jurisprudence on the issue, the court summed up its opinion as follows:

[133] I conclude that the Court has authority to grant an injunction against a non-party resident in a foreign jurisdiction in appropriate circumstances. The fact that an injunction has not before been made against an internet search provider such as Google is reason to tread carefully, but does not establish that the Court does not have subject matter competence. Indeed, the notion that a court may only make the orders it has made in the past is anathema to the spirit of the common law. As Newbury J. observed in Mooney No. 1 at para. 11: … the courts must, in order to preserve the effectiveness of their judgments, adapt to new circumstances. Such adaptability has always been, and continues to be, the genius of the common law.

Google also argued that no order should be granted because the plaintiffs had an effective out of court remedy. Google submitted it was prepared to continue to de-index specific URLs provided by the plaintiffs from time to time. This was something the plaintiffs initially had agreed to try. They provided Google with specific URLs from which the defendants were selling the pirated goods. Google voluntarily blocked 345 URLs from its search results. This proved to be entirely unsatisfactory and ineffective.

[72] However, the process was wholly unsatisfactory from the plaintiffs’ perspective. In place of the de-indexed websites, a whole host of new websites moved up the rankings to take their place. Websites can be generated automatically, resulting in an endless game of “whac-a-mole” with the plaintiffs identifying new URLs and Google deleting them. The plaintiffs argue that any scheme that depends on the deletion of individual URLs is ineffective.

[73] The insufficiency of the voluntary take-down of specific websites was recognized by the Regional Court of Paris in the unreported decision Trib gr inst Paris, 6 November 2013, Max Mosely v. Google France SARL and Google Inc.[Max Mosely]. Mosely had been surreptitiously videotaped by the News of the World while engaging in sexual activity with several partners. The newspaper published the images and made others available on its website. In a French criminal proceeding, the newspaper was found guilty and ordered to cease publishing the images. However, the images remained widely available by searching through Google Images.

[74] Mosely asked Google to stop indexing the pictures with reference to specific URLs. He made many such requests and Google honoured all of the requests but the images continued to be indexed through new URLs. After two years of this process, Mosely asked Google to prevent the images from being indexed at all. Google refused and Mosely applied for an injunction and damages. The Court observed that it was impossible for the plaintiff to have his right enforced by using only the procedures made available by Google (English translation of Max Mosely at 10).

[75] The inadequacy of this approach in the present matter is heightened by Google’s removal of specific URLs from only those searches initiated through Google.ca – a fact that came to the plaintiffs’ attention only after cross-examining Mr. Smith on his affidavit on May 21, 2013. As a result, the defendants’ blocked websites appear when searches are conducted from any country other than Canada, or when a search is conducted within Canada using a Google website other than www.google.ca.

[76] The majority of GW1000 sales occur outside Canada. Thus, quite apart from the practical problem of endless website iterations, the option Google proposes is not equivalent to the order now sought which would compel Google to remove the defendants’ websites from all search results generated by any of Google’s websites worldwide. I therefore conclude that the plaintiffs do not have an out of court remedy available to them.

On the merits Google argued that the order should not be made for four reasons. First, Google said that it provides an important and valuable tool for navigating hundreds of trillions of webpages on the internet. Google argued it could not, as a practical matter, monitor content or arbitrate disputes over content because of the enormous volume of content; because it could not determine whether information was 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. The court did not see this as a problem:

[137] Whether Google is a passive indexer with no control over content has been the subject of litigation in other jurisdictions: González, Max Mosely, and Trkulja. However, the order sought in the present case would not require Google to monitor the content of the defendants’ websites. Rather, the order would simply require Google to remove all of the defendants’ websites from its searches. To put it simply, it is not a question of blocking what is being said, but rather who is saying it. The order is, in many ways, only a slight expansion on the removal of individual URLs, which Google agreed to do voluntarily.

Second, Google submitted it would be unjust to make the order sought because de-indexing entire websites without regard to content of the specific URLs would constitute undue censorship. The court rejected this argument finding that Google already de-indexed other kinds of offending sites.

[139] I do not find this argument persuasive. Google acknowledges that it alters search results to avoid generating links to child pornography and “hate speech” websites. It recognizes its corporate responsibility in this regard, employing 47 full-time employees worldwide who, like Mr. Smith, take down specific websites, including websites subject to court order. Excluding the defendant’s prohibited websites from search results is in keeping with Google’s approach to blocking websites subject to court order.

Third, Google argued that the court should not make an order that could affect searches worldwide because it would put Google in the impossible situation of being ordered to do something that could require it to contravene a law in another jurisdiction. However, on the facts of the case, Google did not suggest that an order requiring it to block the defendants’ websites would offend California law, or indeed the law of any state or country from which a search could be conducted. Google acknowledged that most countries would likely recognize intellectual property rights and view the selling of pirated products as a legal wrong. Fourth, Google argued that the order sought was too broad. Google submitted that if the injunction was granted it should be limited to Google.ca, the website designated for Canada, because no court should make an order that had a reach that extended around the world. The court held that the order sought by Google would be ineffective and should not be so limited.

[146] I note again that on the record before me, the injunction would compel Google to take steps in California or the state in which its search engine is controlled, and would not therefore direct that steps be taken around the world. That the effect of the injunction could reach beyond one state is a separate issue. Even an order mandating or enjoining conduct entirely within British Columbia may have such extraterritorial, or even worldwide effect.

[147] For example, a non-party corporation that warehouses and ships goods for a defendant manufacturing company might be ordered on an interim injunction to freeze the defendants’ goods and refrain from shipping them. That injunction could affect orders received from customers around the world. Could it sensibly be argued that the Court could not grant the injunction because it would have effects worldwide? The impact of an injunction on strangers to the suit or the order itself is a valid consideration in deciding whether to exercise the Court’s jurisdiction to grant an injunction. It does not, however, affect the Court’s authority to make such an order.

[148] Further, although Google has a website for each country to which searches made within that country default, users can override that default and access other country’s Google websites. For example, even if the defendants’ websites were blocked from searches conducted through www.google.ca, Canadian users can go to www.google.co.uk or www.google.fr and obtain results including the defendants’ websites. On the record before me it appears that to be effective, even within Canada, Google must block search results on all of its websites. Furthermore, the defendants’ sales originate primarily in other countries, so the Court’s process cannot be protected unless the injunction ensures that searchers from any jurisdiction do not find the defendants’ websites…

The court then engaged in an assessment of the traditional  factors of balancing of interests and irreparable harm. Those also favored granting injunctive relief. Google was an innocent bystander but it was also facilitating the defendants’ ongoing breaches of the court’s orders. There was no other practical way for the defendants’ website sales to be stopped.

[152] As for balancing the interests of the plaintiffs and non-party Google, the plaintiffs have established that they are suffering irreparable harm by the defendants’ ongoing sale of the GW1000 on the internet. The plaintiffs have also established that Google is inadvertently facilitating that harm through its search engines. While there are other search engines, Google does not contest the plaintiffs’ assertion that Google’s position as the search engine used for 70-75% of internet searches means the defendants will not be commercially successful if they cannot be found through Google’s search services.

[153] Google acknowledges that it can do what is being asked of it. Google does not assert that it would be inconvenienced in any material way or that it would incur expense to do so. The balance of convenience thus favours granting the injunction…

[155] To this list of considerations I would add the degree to which the interests of those other than the applicant and the identified non-party could be affected – here potential purchasers will not be able to find and buy the defendants’ products as easily, but that is as it should be in light of the existing court orders prohibiting the defendants from selling the GW1000 and related products.

[156] Google is an innocent bystander but it is unwittingly facilitating the defendants’ ongoing breaches of this Court’s orders. There is no other practical way for the defendants’ website sales to be stopped. There is no other practical way to remove the defendants’ websites from Google’s search results.

[157] The fundamental question in each case is whether the granting of an injunction is just and equitable in all of the circumstances of the case…:

[158] In determining whether this interim injunction should be granted, I am mindful of Madam Justice Newbury’s admonition that a court should not permit a defendant to frustrate orders of the court and that “courts must, in order to preserve the effectiveness of their judgments, adapt to new circumstances”: Mooney (No. 1) at paras. 10-11.

[159] The Court must adapt to the reality of e-commerce with its potential for abuse by those who would take the property of others and sell it through the borderless electronic web of the internet. I conclude that an interim injunction should be granted compelling Google to block the defendants’ websites from Google’s search results worldwide. That order is necessary to preserve the Court’s process and to ensure that the defendants cannot continue to flout the Court’s orders.

[160] Non-parties affected by Mareva injunctions are not normally before the Court, because applications of that kind are brought without notice. Google was named in this application, served with materials, and attended the hearing. It is not therefore necessary to craft terms anticipating possible conflicts Google could face in complying with the interim injunction. No terms of this kind have been requested by Google and I see no basis on the record before me to expect such difficulties.

The court ruled that the interim injunction sought should be granted and made the following order:

Within 14 days of the date of this judgment, Google Inc. is to cease indexing or referencing in search results on its internet search engines the websites contained in Schedule A to the notice of application.

As noted above, Google applied for leave to appeal the decision to the Court of Appeal and for an order staying the enforcement of the site blocking injunction order. The Court of Appeal granted Google leave to appeal the decision but refused Google’s application to stay enforcement of the injunction order. In dismissing Google’s application to stay the order the court stated the following:

[25]         Through its counsel, Google has given an undertaking as to damages with a view toward tilting the balance of convenience in favor of a stay. Although Google is not a defendant in the underlying proceedings and no relief is otherwise sought against Google, it has taken the extraordinary step of undertaking to pay such damages as the plaintiff may be able to establish it has sustained as a result of an interim partial stay of the order until the hearing of the appeal. Google will track traffic to offending websites and provide that information to plaintiff. If the plaintiff can establish that it has lost profits as result of the continuing operation of those websites in the interim, Google will make good the damages thus sustained. This is a significant undertaking on Google’s part and demonstrates the extent to which Google attaches a commercial value to its ability to provide unfiltered searches to its customers on a global basis. The plaintiff says this is a small measure of comfort. It asks rhetorically: “what value is it to have the right to sue Google for damages?” It rightly points out that, notwithstanding Google’s undertaking, it will face the difficult task of establishing the value of its lost profits in the event the appeal is dismissed. That loss will be difficult to ascertain and may be incalculable. It further says there is a significant risk it will lose future sales and its intellectual property generally if access to the offending websites is not blocked.

[26]         The plaintiff says if there is a stay it will suffer irreparable harm notwithstanding the undertaking and that Google will suffer no such harm. In my view, despite the undertaking, the balance of convenience favours the dismissal of the application for a stay.

[27]         The lack of evidence of irreparable harm, in particular, leads me to the conclusion that Google’s application must be dismissed. As this Court noted in B.C. (A.G.) v. Wale (1986), 9 B.C.L.R. (2d) 333 at 345, an interlocutory injunction should generally not be granted unless there is doubt whether damages would be an adequate remedy:

The requirement that there be doubt as to whether damages will be an adequate remedy is basically a matter of common sense. If damages will be an adequate remedy, and if it appears that the alleged offender can pay them, the court is generally not justified in giving one party his remedy to the detriment of the other before the issues have been tried.

[28]         Irreparable harm, of course, refers to the nature of the harm suffered rather than its magnitude. Any harm that is irreparable in the legal sense may ground an injunction.

[29]         Google says that if the order is enforced pending the hearing of the appeal and if it filters search results globally, doing so will have a “direct and irreversible impact” on Google.

[30]         Google does not lead evidence to the effect, or argue, that it or the public will suffer irreparable harm as a result of the specific order made below. There is no evidence significant costs will be incurred by Google to effect the order, or that costs of compliance will be irreparable. Nor will the inability of customers to find the offending websites online per se damage Google’s image or business.  It does not allege that there is any harm to the public arising from the blocking of the specific Internet sites identified by the injunction. In that sense it does not allege harm to the public interest of the sort considered inCanadian Federation of Students v. Greater Vancouver Transportation Authority, 2007 BCCA 221.

[31]         Google argues, rather, that it will suffer irreparable harm as a result of the precedent established by the granting and enforcement of the injunction. It says the fact a Canadian court has made an order limiting worldwide search results and the fact the order has not been stayed pending an appeal, will have serious and damaging effects on its clients and its business. It argues the enforcement of the injunction and presumably its observation by Google may result in other jurisdictions regarding Google as a vehicle for global enforcement of their laws. It makes a “floodgates” argument to the effect that similar orders in other jurisdictions may result in global content on the Internet being reduced to the lowest common denominator. It is of the view that compliance with the order would cause users to lose trust in the credibility of the Google search engine and lead to a loss of business.

[32]         In order to address this allegation of irreparable harm it is necessary to isolate the harm that is said to arise from the precedent established by the judgment of the British Columbia Supreme Court, on the one hand, from the harm said to result from the refusal to stay that judgment pending the hearing of the appeal, on the other.

[33]         The order made below is deemed to be valid and correct until and unless it is reversed on appeal. Any harm said to arise from the making of the order and its publication, the unhappy precedent, as Google sees it, has already been incurred. This Court, on an application for a stay, cannot deny the existence of the precedent established by the judgment below or pronounce upon the merits of the appeal, except to say that the appeal is not devoid of merit. If the injunction is set aside on appeal, the decision below will ultimately, and perhaps shortly, have no precedential value. In the meantime, it has precedential value whatever a justice of this Court may say on a stay application.

[34]         Google’s argument that a refusal to grant a stay pending the hearing of the appeal, or what it refers to as “the enforcement of the order” pending the appeal, will itself have significant and negative precedential value. This suggests that even if the order is set aside on appeal, Google will suffer irreparable harm as a result of compliance with the court order in the interim, because its clients will think less of it or because it is more likely to be the target of injunction applications.

[35]         I cannot accede to that argument. First, while clear proof of irreparable harm is not a prerequisite to the granting of a stay, the onus rests upon the applicant to establish sufficient doubt as to the adequacy of damages before a stay will be granted: B.C. (A.G.) v. Wale and see Robert J. Sharpe, Injunctions and Specific Performance, loose-leaf (Toronto: Canada Law Book, 2013) at § 2.41-2.43. I am not satisfied Google has done so in this case. A stay will not change the fact that the Supreme Court of British Columbia has found jurisdiction to make the impugned order. It would only permit Google to say to its customers that a justice of the Court of Appeal has ordered that Google will not be compelled to comply with the judgment below until and unless it is been affirmed by the Court of Appeal. Google’s customers will be left, as they are now, to weigh the merits of Google’s argument that the court below exceeded its jurisdiction and that the judgment of the Supreme Court will be reversed on appeal. A stay should not be regarded as an expression by this Court of any considered opinion with respect to the prospect of success on appeal, except as an indication that there is an arguable appeal. The stay will only be useful to avoid the irreparable harm alleged by Google if it is used, as it should not be, to assure Google’s customers that the decision below will not withstand scrutiny on appeal.

[36]         Further, it is an argument the court should reject in principle. In my view, I should not give any weight to the argument that Google’s reputation will suffer if it acts in accordance with the rule of law, appeals those decisions it believes will have an adverse impact on its clients, assiduously defends its business and its clients’ interests and pursues its appeal diligently. It would be wrong in principle for me to recognize, as irreparable harm, any damage to Google’s reputation that might result from its clients’ misapprehension of procedure in this jurisdiction and the appropriate test on an application for an interim stay in the Court of Appeal.

 

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