Google Inc. v. Equustek Solutions Inc., 2017 SCC 34, [2017] 1 SCR 824

  

 

SUPREME COURT OF CANADA

 

Citation: Google Inc. v. Equustek Solutions Inc., 2017 SCC 34, [2017] 1 S.C.R. 824

Appeal Heard: December 6, 2016 Judgment Rendered: June 28, 2017 Docket: 36602

 

Between:

Google Inc.

Appellant

 

and

 

Equustek Solutions Inc., Robert Angus and Clarma Enterprises Inc.

Respondents

 

- and -

 

Attorney General of Canada, Attorney General of Ontario, Canadian Civil Liberties Association, OpenMedia Engagement Network, Reporters Committee for Freedom of the Press, American Society of News Editors, Association of Alternative Newsmedia, The Center for Investigative Reporting, Dow Jones & Company, Inc., First Amendment Coalition, First Look Media Works, Inc., New England First Amendment Coalition, News Media Alliance (formerly known as Newspaper Association of America), AOL Inc., California Newspaper Publishers Association, The Associated Press, The Investigative Reporting Workshop at American University, Online News Association, Society of Professional Journalists, Human Rights Watch, ARTICLE 19, Open Net (Korea), Software Freedom Law Centre, Center for Technology and Society, Wikimedia Foundation, British Columbia Civil Liberties Association, Electronic Frontier Foundation, International Federation of the Phonographic Industry, Music Canada, Canadian Publishers’ Council, Association of Canadian Publishers, International Confederation of Societies of Authors and Composers, International Confederation of Music Publishers, Worldwide Independent Network and International Federation of Film Producers Associations

Interveners

 

 

Coram: McLachlin C.J. and Abella, Moldaver, Karakatsanis, Wagner, Gascon, Côté, Brown and Rowe JJ.

 

Reasons for Judgment: (paras. 1 to 54)

Abella J. (McLachlin C.J. and Moldaver, Karakatsanis, Wagner, Gascon and Brown JJ. concurring)

 

Joint Dissenting Reasons: (paras. 55 to 82)

Côté and Rowe JJ.

 

 

 

 

Google Inc. v. Equustek Solutions Inc., 2017 SCC 34, [2017] 1 S.C.R. 824

 

Google Inc.                                                                                                      Appellant

v.

Equustek Solutions Inc.,

Robert Angus and Clarma Enterprises Inc.                                              Respondents

and

Attorney General of Canada, Attorney General of Ontario,

Canadian Civil Liberties Association, OpenMedia

Engagement Network, Reporters Committee for

Freedom of the Press, American Society of News Editors,

Association of Alternative Newsmedia, The Center for

Investigative Reporting, Dow Jones & Company, Inc.,

First Amendment Coalition, First Look Media Works, Inc.,

New England First Amendment Coalition, News Media

Alliance (formerly known as Newspaper Association of America),

AOL Inc., California Newspaper Publishers Association,

The Associated Press, The Investigative Reporting

Workshop at American University, Online News Association,

Society of Professional Journalists, Human Rights Watch,

ARTICLE 19, Open Net (Korea), Software Freedom Law Centre,

Center for Technology and Society, Wikimedia Foundation,

British Columbia Civil Liberties Association,

Electronic Frontier Foundation, International Federation

of the Phonographic Industry, Music Canada,

Canadian Publishers’ Council, Association of Canadian Publishers,

International Confederation of Societies of Authors and Composers,

International Confederation of Music Publishers,

Worldwide Independent Network and International

Federation of Film Producers Associations                                                 Interveners

Indexed as: Google Inc. v. Equustek Solutions Inc.

2017 SCC 34

File No.: 36602.

2016: December 6; 2017: June 28.

Present: McLachlin C.J. and Abella, Moldaver, Karakatsanis, Wagner, Gascon, Côté, Brown and Rowe JJ.

on appeal from the court of appeal for british columbia

                    Injunctions — Interlocutory injunction — Non‑party — Technology company bringing action against distributor for unlawful use and sale of its intellectual property through Internet — Company granted interlocutory injunction against Google, a non‑party to underlying action, to cease indexing or referencing certain search results on its Internet search engine — Whether Google can be ordered, pending trial of action, to globally de‑index websites of distributor which, in breach of several court orders, is using those websites to unlawfully sell intellectual property of another company — Whether Supreme Court of British Columbia had jurisdiction to grant injunction with extraterritorial effect — Whether, if it did, it was just and equitable to do so.

                    E is a small technology company in British Columbia that launched an action against D. E claimed that D, while acting as a distributor of E’s products, began to re‑label one of the products and pass it off as its own. D also acquired confidential information and trade secrets belonging to E, using them to design and manufacture a competing product. D filed statements of defence disputing E’s claims, but eventually abandoned the proceedings and left the province. Some of D’s statements of defence were subsequently struck.

                    Despite court orders prohibiting the sale of inventory and the use of E’s intellectual property, D continues to carry on its business from an unknown location, selling its impugned product on its websites to customers all over the world. E approached Google and requested that it de‑index D’s websites. Google refused. E then brought court proceedings, seeking an order requiring Google to do so. Google asked E to obtain a court order prohibiting D from carrying on business on the Internet saying it would comply with such an order by removing specific webpages.

                    An injunction was issued by the Supreme Court of British Columbia ordering D to cease operating or carrying on business through any website. Between December 2012 and January 2013, Google advised E that it had de‑indexed 345 specific webpages associated with D. It did not, however, de‑index all of D’s websites. De‑indexing webpages but not entire websites proved to be ineffective since D simply moved the objectionable content to new pages within its websites, circumventing the court orders. Moreover, Google had limited the de‑indexing to searches conducted on google.ca. E therefore obtained an interlocutory injunction to enjoin Google from displaying any part of D’s websites on any of its search results worldwide. The Court of Appeal for British Columbia dismissed Google’s appeal.

                    Held (Côté and Rowe JJ. dissenting): The appeal is dismissed and the worldwide interlocutory injunction against Google is upheld.

                    Per McLachlin C.J. and Abella, Moldaver, Karakatsanis, Wagner, Gascon and Brown JJ.: The issue is whether Google can be ordered, pending a trial, to globally de‑index D’s websites which, in breach of several court orders, is using those websites to unlawfully sell the intellectual property of another company.

                    The decision to grant an interlocutory injunction is a discretionary one and entitled to a high degree of deference. Interlocutory injunctions are equitable remedies that seek to ensure that the subject matter of the litigation will be preserved so that effective relief will be available when the case is ultimately heard on the merits. Their character as “interlocutory” is not dependent on their duration pending trial. Ultimately, the question is whether granting the injunction is just and equitable in the circumstances of the case.

                    The test for determining whether the court should exercise its discretion to grant an interlocutory injunction against Google has been met in this case: there is a serious issue to be tried; E is suffering irreparable harm as a result of D’s ongoing sale of its competing product through the Internet; and the balance of convenience is in favour of granting the order sought.

                    Google does not dispute that there is a serious claim, or that E is suffering irreparable harm which it is inadvertently facilitating through its search engine. Nor does it suggest that it would be inconvenienced in any material way, or would incur any significant expense, in de‑indexing D’s websites. Its arguments are that the injunction is not necessary to prevent irreparable harm to E and is not effective; that as a non‑party it should be immune from the injunction; that there is no necessity for the extraterritorial reach of the order; and that there are freedom of expression concerns that should have tipped the balance against granting the order.

                    Injunctive relief can be ordered against someone who is not a party to the underlying lawsuit. When non‑parties are so involved in the wrongful acts of others that they facilitate the harm, even if they themselves are not guilty of wrongdoing, they can be subject to interlocutory injunctions. It is common ground that D was unable to carry on business in a commercially viable way without its websites appearing on Google. The injunction in this case flows from the necessity of Google’s assistance to prevent the facilitation of D’s ability to defy court orders and do irreparable harm to E. Without the injunctive relief, it was clear that Google would continue to facilitate that ongoing harm.

                    Where it is necessary to ensure the injunction’s effectiveness, a court can grant an injunction enjoining conduct anywhere in the world. The problem in this case is occurring online and globally. The Internet has no borders — its natural habitat is global. The only way to ensure that the interlocutory injunction attained its objective was to have it apply where Google operates — globally. 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, since purchasers outside Canada could easily continue purchasing from D’s websites, and Canadian purchasers could find D’s websites even if those websites were de‑indexed on google.ca.

                    Google’s argument that a global injunction violates international comity because it is 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, is theoretical. If Google has evidence that complying with such an injunction would require it to violate the laws of another jurisdiction, including interfering with freedom of expression, it is always free to apply to the British Columbia courts to vary the interlocutory order accordingly. To date, Google has made no such application. In the absence of an evidentiary foundation, and given Google’s right to seek a rectifying order, it is not equitable to deny E the extraterritorial scope it needs to make the remedy effective, or even to put the onus on it to demonstrate, country by country, where such an order is legally permissible.

                    D and its representatives have ignored all previous court orders made against them, have left British Columbia, and continue to operate their business from unknown locations outside Canada. E has made efforts to locate D with limited success. D is only able to survive — at the expense of E’s survival — on Google’s search engine which directs potential customers to D’s websites. This makes Google the determinative player in allowing the harm to occur. On balance, since the world‑wide injunction is the only effective way to mitigate the harm to E pending the trial, the only way, in fact, to preserve E itself pending the resolution of the underlying litigation, and since any countervailing harm to Google is minimal to non‑existent, the interlocutory injunction should be upheld.

                    Per Côté and Rowe JJ. (dissenting): While the court had jurisdiction to issue the injunctive order against Google, it should have refrained from doing so. Numerous factors affecting the grant of an injunction strongly favour judicial restraint in this case.

                    First, the Google Order in effect amounts to a final determination of the action because it removes any potential benefit from proceeding to trial. In its original underlying claim, E sought injunctions modifying the way D carries out its website business. E has been given more injunctive relief than it sought in its originating claim, including requiring D to cease website business altogether. Little incentive remains for E to return to court to seek a lesser injunctive remedy. This is evidenced by E’s choice to not seek default judgment during the roughly five years which have passed since it was given leave to do so. The Google Order provides E with more equitable relief than it sought against D and gives E an additional remedy that is final in nature. The order against Google, while interlocutory in form, is final in effect. The test for interlocutory injunctions does not apply to an order that is effectively final. In these circumstances, an extensive review of the merits of this case was therefore required but was not carried out by the court below, contrary to caselaw. The Google Order does not meet the test for a permanent injunction. Although E’s claims were supported by a good prima facie case, it was not established that D designed and sold counterfeit versions of E’s product, or that this resulted in trademark infringement and unlawful appropriation of trade secrets.

                    Second, Google is a non‑party to the proceedings between E and D. E alleged that Google’s search engine was facilitating D’s ongoing breach by leading customers to D’s websites. However, the prior order that required D to cease carrying on business through any website was breached as soon as D established a website to conduct its business, regardless of how visible that website might be through Google searches. Google did not aid or abet the doing of the prohibited act.

                    Third, the Google Order is mandatory and requires ongoing modification and supervision because D is launching new websites to replace de‑listed ones. Courts should avoid granting injunctions that require such cumbersome court‑supervised updating.

                    Furthermore, the Google Order has not been shown to be effective in making D cease operating or carrying on business through any website. Moreover, the Google Order does not assist E in modifying D’s websites, as E sought in its originating claim for injunctive relief. The most that can be said is the Google Order might reduce the harm to E. But it has not been shown that the Google Order is effective in doing so. D’s websites can be found using other search engines, links from other sites, bookmarks, email, social media, printed material, word‑of‑mouth, or other indirect means. D’s websites are open for business on the Internet whether Google searches list them or not.

                    Finally, there are alternative remedies available to E. E sought a world‑wide Mareva injunction to freeze D’s assets in France, but the Court of Appeal for British Columbia urged E to pursue a remedy in French courts. There is no reason why E cannot do what the Court of Appeal urged it to do. E could also pursue injunctive relief against the ISP providers. In addition, E could initiate contempt proceedings in France or in any other jurisdiction with a link to the illegal websites. Therefore, the Google Order ought not to have been granted.

Cases Cited

By Abella J.

                    Applied: RJR — MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311; MacMillan Bloedel Ltd. v. Simpson, [1996] 2 S.C.R. 1048; considered: Norwich Pharmacal Co. v. Customs and Excise Commissioners, [1974] A.C. 133; Mareva Compania Naviera S.A. v. International Bulkcarriers S.A., [1975] 2 Lloyd’s Rep. 509; referred to: Manitoba (Attorney General) v. Metropolitan Stores Ltd., [1987] 1 S.C.R. 110; Seaward v. Paterson, [1897] 1 Ch. 545; York University v. Bell Canada Enterprises (2009), 311 D.L.R. (4th) 755; Cartier International AG v. British Sky Broadcasting Ltd., [2016] EWCA Civ 658, [2017] 1 All E.R. 700; Warner‑Lambert Co. v. Actavis Group PTC EHF, [2015] EWHC 485 (Pat.), 144 B.M.L.R. 194; Aetna Financial Services Ltd. v. Feigelman, [1985] 1 S.C.R. 2; Impulsora Turistica de Occidente, S.A. de C.V. v. Transat Tours Canada Inc., 2007 SCC 20, [2007] 1 S.C.R. 867; Mooney v. Orr (1994), 98 B.C.L.R. (2d) 318; Babanaft International Co. S.A. v. Bassatne, [1990] 1 Ch. 13; Republic of Haiti v. Duvalier, [1990] 1 Q.B. 202; Derby & Co. v. Weldon, [1990] 1 Ch. 48; Derby & Co. v. Weldon (Nos. 3 and 4), [1990] 1 Ch. 65.

By Côté and Rowe JJ. (dissenting)

                    RJR — MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311; Fourie v. Le Roux, [2007] UKHL 1, [2007] 1 All E.R. 1087; Guaranty Trust Co. of New York v. Hannay & Co., [1915] 2 K.B. 536; Cartier International AG v. British Sky Broadcasting Ltd., [2014] EWHC 3354 (Ch.), [2015] 1 All E.R. 949; Mercedes Benz A.G. v. Leiduck, [1996] 1 A.C. 284; John Deere Ltd. v. Firdale Farms Ltd. (1987), 45 D.L.R. (4th) 641; Parkin v. Thorold (1852), 16 Beav. 59, 51 E.R. 698; Schooff v. British Columbia (Medical Services Commission), 2010 BCCA 396, 323 D.L.R. (4th) 680; McIsaac v. Healthy Body Services Inc., 2009 BCSC 1716; Plouffe v. Roy, 2007 CanLII 37693; Spiller v. Brown (1973), 43 D.L.R. (3d) 140; 1711811 Ontario Ltd. v. Buckley Insurance Brokers Ltd., 2014 ONCA 125, 371 D.L.R. (4th) 643; MacMillan Bloedel Ltd. v. Simpson, [1996] 2 S.C.R. 1048; Seaward v. Paterson, [1897] 1 Ch. 545; Acrow (Automation) Ltd. v. Rex Chainbelt Inc., [1971] 1 W.L.R. 1676; Norwich Pharmacal Co. v. Customs and Excise Commissioners, [1974] A.C. 133; National Commercial Bank of Jamaica Ltd. v. Olint Corp., [2009] 1 W.L.R. 1405; Redland Bricks Ltd. v. Morris, [1970] A.C. 652; Co‑operative Insurance Society Ltd. v. Argyll Stores (Holdings) Ltd., [1998] A.C. 1; Attorney General v. Observer Ltd., [1990] 1 A.C. 109.

Statutes and Regulations Cited

Digital Millennium Copyright Act, Pub. L. No. 105‑304, 112 Stat. 2680 (1998).

Law and Equity Act, R.S.B.C. 1979, c. 224, s. 36.

Law and Equity Act, R.S.B.C. 1996, c. 253, s. 39(1).

Authors Cited

Bean, David, Andrew Burns and Isabel Parry. Injunctions, 11th ed. London: Sweet & Maxwell, 2012.

Berryman, Jeffrey. The Law of Equitable Remedies, 2nd ed. Toronto: Irwin Law, 2013.

Black, Vaughan, and Edward Babin. “Mareva Injunctions in Canada: Territorial Aspects” (1997), 28 Can. Bus. L.J. 430.

Fraser, Peter G., John W. Horn and Susan A. Griffin. The Conduct of Civil Litigation in British Columbia, 2nd ed. Markham, Ont.: LexisNexis, 2007 (loose‑leaf updated December 2016, release 24).

Pitel, Stephen G. A., and Andrew Valentine. “The Evolution of the Extra‑territorial Mareva Injunction in Canada: Three Issues” (2006), 2 J. Priv. Int’l L. 339.

Riordan, Jaani. The Liability of Internet Intermediaries. Oxford: Oxford University Press, 2016.

Sharpe, Robert J. Injunctions and Specific Performance, loose‑leaf ed. Toronto: Canada Law Book, 1992 (updated November 2016, release 25).

Spry, I. C. F. The Principles of Equitable Remedies: Specific Performance, Injunctions, Rectification and Equitable Damages, 9th ed. Pyrmont, N.S.W.: Lawbook, 2014.

                    APPEAL from a judgment of the British Columbia Court of Appeal (Frankel, Groberman and Harris JJ.A.), 2015 BCCA 265, 75 B.C.L.R. (5th) 315, 373 B.C.A.C. 240, 641 W.A.C. 240, 39 B.L.R. (5th) 175, 71 C.P.C. (7th) 215, 135 C.P.R. (4th) 173, 386 D.L.R. (4th) 224, [2015] 11 W.W.R. 45, [2015] B.C.J. No. 1193 (QL), 2015 CarswellBC 1590 (WL Can.), affirming a decision of Fenlon J., 2014 BCSC 1063, 63 B.C.L.R. (5th) 145, 28 B.L.R. (5th) 265, 374 D.L.R. (4th) 537, [2014] 10 W.W.R. 652, [2014] B.C.J. No. 1190 (QL), 2014 CarswellBC 1694 (WL Can.), granting an interlocutory injunction against Google. Appeal dismissed, Côté and Rowe JJ. dissenting.

                    William C. McDowell, Marguerite F. Ethier and Scott M. J. Rollwagen, for the appellant.

                    Robbie Fleming and Michael Sobkin, for the respondents.

                    Jeffrey G. Johnston, for the intervener the Attorney General of Canada.

                    Sandra Nishikawa, John Corelli and Brent Kettles, for the intervener the Attorney General of Ontario.

                    Mathew Good, for the intervener the Canadian Civil Liberties Association.

                    Cynthia Khoo, for the intervener the OpenMedia Engagement Network.

                    Written submissions only by Iris Fischer and Helen Richards, for the interveners the Reporters Committee for Freedom of the Press, the American Society of News Editors, the Association of Alternative Newsmedia, The Center for Investigative Reporting, Dow Jones & Company, Inc., the First Amendment Coalition, First Look Media Works, Inc., the New England First Amendment Coalition, the News Media Alliance (formerly known as the Newspaper Association of America), AOL Inc., the California Newspaper Publishers Association, The Associated Press, The Investigative Reporting Workshop at American University, the Online News Association and the Society of Professional Journalists.

                    Written submissions only by Paul Schabas and Kaley Pulfer, for the interveners Human Rights Watch, ARTICLE 19, Open Net (Korea), the Software Freedom Law Centre and the Center for Technology and Society.

                    Written submissions only by David T. S. Fraser and Jane O’Neill, for the intervener the Wikimedia Foundation.

                    Justin Safayeni and Carlo Di Carlo, for the intervener the British Columbia Civil Liberties Association.

                    David Wotherspoon and Daniel Byma, for the intervener the Electronic Frontier Foundation.

                    Barry B. Sookman, Dan Glover and Miranda Lam, for the interveners the International Federation of the Phonographic Industry, Music Canada, the Canadian Publishers’ Council, the Association of Canadian Publishers, the International Confederation of Societies of Authors and Composers, the International Confederation of Music Publishers and the Worldwide Independent Network.

                    Gavin MacKenzie and Brooke MacKenzie, for the intervener the International Federation of Film Producers Associations.

                    The judgment of McLachlin C.J. and Abella, Moldaver, Karakatsanis, Wagner, Gascon and Brown JJ. was delivered by

[1]                              Abella J. — The issue in this appeal is whether Google can be ordered, pending a trial, to globally de-index the websites of a company which, in breach of several court orders, is using those websites to unlawfully sell the intellectual property of another company. The answer turns on classic interlocutory injunction jurisprudence: is there a serious issue to be tried; would irreparable harm result if the injunction were not granted; and does the balance of convenience favour granting or refusing the injunction. Ultimately, the question is whether granting the injunction would be just and equitable in all the circumstances of the case.

Background

[2]                              Equustek Solutions Inc. is a small technology company in British Columbia. It manufactures networking devices that allow complex industrial equipment made by one manufacturer to communicate with complex industrial equipment made by another manufacturer.

[3]                              The underlying action between Equustek and the Datalink defendants (Morgan Jack, Datalink Technology Gateways Inc., and Datalink Technologies Gateways LLC — “Datalink”) was launched by Equustek on April 12, 2011. It claimed that 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. Datalink also 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. When Equustek discovered this in 2011, it terminated the distribution agreement it had with Datalink and demanded that Datalink delete all references to Equustek’s products and trademarks on its websites.

[4]                              The Datalink defendants filed statements of defence disputing Equustek’s claims.

[5]                              On September 23, 2011, Leask J. granted an injunction ordering Datalink to return to Equustek any source codes, board schematics, and any other documentation it may have had in its possession that belonged to Equustek. The court also prohibited Datalink from referring to Equustek or any of Equustek’s products on its websites. It ordered Datalink to post a statement on its websites informing customers that Datalink was no longer a distributor of Equustek products and directing customers interested in Equustek’s products to Equustek’s website. In addition, Datalink was ordered to give Equustek a list of customers who had ordered an Equustek product from Datalink.

[6]                              On March 21, 2012, Fenlon J. found that Datalink had not properly complied with this order and directed it to produce a new customer list and make certain changes to the notices on their websites.

[7]                              Datalink abandoned the proceedings and left the jurisdiction without producing any documents or complying with any of the orders. Some of Datalink’s statements of defence were subsequently struck.

[8]                              On July 26, 2012, Punnett J. granted a Mareva injunction freezing Datalink’s worldwide assets, including its entire product inventory. He found that Datalink had incorporated “a myriad of shell corporations in different jurisdictions”, continued to sell the impugned product, reduced prices to attract more customers, and was offering additional services that Equustek claimed disclosed more of its trade secrets. He concluded that Equustek would suffer irreparable harm if the injunction were not granted, and that, on the balance of convenience and due to a real risk of the dissipation of assets, it was just and equitable to grant the injunction against Datalink. 

[9]                              On August 3, 2012, Fenlon J. granted another interlocutory injunction prohibiting Datalink from dealing with broader classes of intellectual property, including “any use of whole categories of documents and information that lie at the heart of any business of a kind engaged in by both parties”. She noted that Equustek’s “earnings ha[d] fallen drastically since [Datalink] began [its] impugned activities” and concluded that “the effect of permitting [Datalink] to carry on [its] business [would] also cause irreparable harm to [Equustek]”.

[10]                          On September 26, 2012, Equustek brought an application to have Datalink and its principal, Morgan Jack, found in contempt. No one appeared on behalf of Datalink. Groves J. issued a warrant for Morgan Jack’s arrest. It remains outstanding.

[11]                          Despite the court orders prohibiting the sale of inventory and the use of Equustek’s intellectual property, Datalink continues to carry on its business from an unknown location, selling its impugned product on its websites to customers all over the world.

[12]                          Not knowing where Datalink or its suppliers were, and finding itself unable to have the websites removed by the websites’ hosting companies, Equustek approached Google in September 2012 and requested that it de-index the Datalink websites. Google refused. Equustek then brought court proceedings seeking an order requiring Google to do so.

[13]                          When it was served with the application materials, Google asked Equustek to obtain a court order prohibiting Datalink from carrying on business on the Internet. Google told Equustek it would comply with such an order by removing specific webpages. Pursuant to its internal policy, Google only voluntarily de-indexes individual webpages, not entire websites. Equustek agreed to try this approach.

[14]                          On December 13, 2012, Equustek appeared in court with Google. An injunction was issued by Tindale J. ordering Datalink to “cease operating or carrying on business through any website”. Between December 2012 and January 2013, Google advised Equustek that it had de-indexed 345 specific webpages associated with Datalink. It did not, however, de-index all of the Datalink websites.

[15]                          Equustek soon discovered that de-indexing webpages but not entire websites was ineffective since Datalink simply moved the objectionable content to new pages within its websites, circumventing the court orders.

[16]                          Google had limited the de-indexing to those searches that were conducted on google.ca. Google’s search engine operates through dedicated websites all over the world. The Internet search services are free, but Google earns money by selling advertising space on the webpages that display search results. Internet users with Canadian Internet Protocol addresses are directed to “google.ca” when performing online searches. But users can also access different Google websites directed at other countries by using the specific Uniform Resource Locator, or URL, for those sites. That means that someone in Vancouver, for example, can access the Google search engine as though he or she were in another country simply by typing in that country’s Google URL. Potential Canadian customers could, as a result, find Datalink’s websites even if they were blocked on google.ca. Given that the majority of the sales of Datalink’s GW1000 were to purchasers outside of Canada, Google’s de-indexing did not have the necessary protective effect.

[17]                          Equustek therefore sought an interlocutory injunction to enjoin Google from displaying any part of the Datalink websites on any of its search results worldwide. Fenlon J. granted the order (374 D.L.R. (4th) 537 (B.C.S.C.)). The operative part states:

Within 14 days of the date of this order, Google Inc. is to cease indexing or referencing in search results on its internet search engines the [Datalink] websites . . ., including all of the subpages and subdirectories of the listed websites, until the conclusion of the trial of this action or further order of this court. [Emphasis added.]

[18]                          Fenlon J. noted that Google controls between 70-75 percent of the global searches on the Internet and that Datalink’s ability to sell its counterfeit product is, in large part, contingent on customers being able to locate its websites through the use of Google’s search engine. Only by preventing potential customers from accessing the Datalink websites, could Equustek be protected. Otherwise, Datalink would be able to continue selling its product online and the damages Equustek would suffer would not be recoverable at the end of the lawsuit.

[19]                          Fenlon J. concluded that this irreparable harm was being facilitated through Google’s search engine; that Equustek had no alternative but to require Google to de-index the websites; that Google would not be inconvenienced; and that, for the order to be effective, the Datalink websites had to be prevented from being displayed on all of Google’s search results, not just google.ca. As she said:

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, [Datalink’s] 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 [Datalink’s] websites.^[1]

[20]                          The Court of Appeal of British Columbia dismissed Google’s appeal (386 D.L.R. (4th) 224). Groberman J.A. accepted Fenlon J.’s conclusion that she had in personam jurisdiction over Google and could therefore make an order with extraterritorial effect. He also agreed that courts of inherent jurisdiction could grant equitable relief against non-parties. Since ordering an interlocutory injunction against Google was the only practical way to prevent Datalink from flouting the court’s several orders, and since there were no identifiable countervailing comity or freedom of expression concerns that would prevent such an order from being granted, he upheld the interlocutory injunction.

[21]                          For the following reasons, I agree with Fenlon J. and Groberman J.A. that the test for granting an interlocutory injunction against Google has been met in this case.

Analysis

[22]                          The decision to grant an interlocutory injunction is a discretionary one and entitled to a high degree of deference (Manitoba (Attorney General) v. Metropolitan Stores Ltd., [1987] 1 S.C.R. 110, at pp. 155-56). In this case, I see no reason to interfere.

[23]                          Injunctions are equitable remedies. “The powers of courts with equitable jurisdiction to grant injunctions are, subject to any relevant statutory restrictions, unlimited” (Ian Spry, The Principles of Equitable Remedies (9th ed. 2014), at p. 333).  Robert Sharpe notes that “[t]he injunction is a flexible and drastic remedy. Injunctions are not restricted to any area of substantive law and are readily enforceable through the court’s contempt power” (Injunctions and Specific Performance (loose-leaf ed.), at para. 2.10).

[24]                          An interlocutory injunction is normally enforceable until trial or some other determination of the action. Interlocutory injunctions seek to ensure that the subject matter of the litigation will be “preserved” so that effective relief will be available when the case is ultimately heard on the merits (Jeffrey Berryman, The Law of Equitable Remedies (2nd ed. 2013), at pp. 24-25). Their character as “interlocutory” is not dependent on their duration pending trial.

[25]                          RJR — MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, sets out a three-part test for determining whether a court should exercise its discretion to grant an interlocutory injunction: is there a serious issue to be tried; would the person applying for the injunction suffer irreparable harm if the injunction were not granted; and is the balance of convenience in favour of granting the interlocutory injunction or denying it. The fundamental question is whether the granting of an injunction is just and equitable in all of the circumstances of the case. This will necessarily be context-specific.

[26]                          Google does not dispute that there is a serious claim. Nor does it dispute that Equustek is suffering irreparable harm as a result of Datalink’s ongoing sale of the GW1000 through the Internet. And it acknowledges, as Fenlon J. found, that it inadvertently facilitates the harm through its search engine which leads purchasers directly to the Datalink websites.

[27]                          Google argues, however, that the injunction issued against it is not necessary to prevent that irreparable harm, and that it is not effective in so doing.  Moreover, it argues that as a non-party, it should be immune from the injunction. As for the balance of convenience, it challenges the propriety and necessity of the extraterritorial reach of such an order, and raises freedom of expression concerns that it says should have tipped the balance against granting the order. These arguments go both to whether the Supreme Court of British Columbia had jurisdiction to grant the injunction and whether, if it did, it was just and equitable to do so in this case.

[28]                          Google’s first argument is, in essence, that non-parties cannot be the subject of an interlocutory injunction. With respect, this is contrary to the jurisprudence. Not only can injunctive relief be ordered against someone who is not a party to the underlying lawsuit, the contours of the test are not changed. As this Court said in MacMillan Bloedel Ltd. v. Simpson, [1996] 2 S.C.R. 1048, injunctions may be issued “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” (para. 15, citing s. 36 of the Law and Equity Act, R.S.B.C. 1979, c. 224). MacMillan Bloedel involved a logging company seeking to restrain protesters from blocking roads. The company obtained an interlocutory injunction prohibiting not only specifically named individuals, but also “John Doe, Jane Doe and Persons Unknown” and “all persons having notice of th[e] Order” from engaging in conduct which interfered with its operations at specific locations (para. 5). In upholding the injunction, McLachlin J. noted that

[i]t may be confidently asserted . . . that both English and Canadian authorities support the view that non-parties are bound by injunctions: if non-parties violate injunctions, they are subject to conviction and punishment for contempt of court. The courts have jurisdiction to grant interim injunctions which all people, on pain of contempt, must obey. [Emphasis added; para. 31.]

 

See also Berryman, at pp. 57-60; Sharpe, at paras. 6.260 to 6.265.

[29]                          In other words, where a non-party violates a court order, there is a principled basis for treating the non-party as if it had been bound by the order. The non-party’s obligation arises “not because [it] is bound by the injunction by being a party to the cause, but because [it] is conducting [itself] so as to obstruct the course of justice” (MacMillan Bloedel, at para. 27, quoting Seaward v. Paterson, [1897] 1 Ch. 545 (C.A.), at p. 555).

[30]                          The pragmatism and necessity of such an approach was concisely explained by Fenlon J. in the case before us when she offered the following 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.^[2]

[31]                          Norwich orders are analogous and can also be used to compel non-parties to disclose information or documents in their possession required by a claimant (Norwich Pharmacal Co. v. Customs and Excise Commissioners, [1974] A.C. 133 (H.L.), at p. 175). Norwich orders have increasingly been used in the online context by plaintiffs who allege that they are being anonymously defamed or defrauded and seek orders against Internet service providers to disclose the identity of the perpetrator (York University v. Bell Canada Enterprises (2009), 311 D.L.R. (4th) 755 (Ont. S.C.J.)).  Norwich disclosure may be ordered against non-parties who are not themselves guilty of wrongdoing, but who are so involved in the wrongful acts of others that they facilitate the harm. In Norwich, this was characterized as a duty to assist the person wronged (p. 175; Cartier International AG v. British Sky Broadcasting Ltd., [2017] 1 All E.R. 700 (C.A.), at para. 53). Norwich supplies a principled rationale for granting injunctions against non-parties who facilitate wrongdoing (see Cartier, at paras. 51-55; and Warner-Lambert Co. v. Actavis Group PTC EHF, 144 B.M.L.R. 194 (Ch.)).

[32]                          This approach was applied in Cartier, where the Court of Appeal of England and Wales held that injunctive relief could be awarded against five non-party Internet service providers who had not engaged in, and were not accused of any wrongful act. The Internet service providers were ordered to block the ability of their customers to access certain websites in order to avoid facilitating infringements of the plaintiff’s trademarks. (See also Jaani Riordan, The Liability of Internet Intermediaries (2016), at pp. 412 and 498-99.)

[33]                          The same logic underlies Mareva injunctions, which can also be issued against non-parties. Mareva injunctions are used to freeze assets in order to prevent their dissipation pending the conclusion of a trial or action (Mareva Compania Naviera S.A. v. International Bulkcarriers S.A., [1975] 2 Lloyd’s Rep. 509 (C.A.); Aetna Financial Services Ltd. v. Feigelman, [1985] 1 S.C.R. 2). A Mareva injunction that requires a defendant not to dissipate his or her assets sometimes requires the assistance of a non-party, which in turn can result in an injunction against the non-party if it is just and equitable to do so (Stephen Pitel and Andrew Valentine, “The Evolution of the Extra-territorial Mareva Injunction in Canada: Three Issues” (2006), 2 J. Priv. Int’l L. 339, at p. 370; Vaughan Black and Edward Babin, “Mareva Injunctions in Canada: Territorial Aspects” (1997), 28 Can. Bus. L.J. 430, at pp. 452-53; Berryman, at pp. 128-31). Banks and other financial institutions have, as a result, been bound by Mareva injunctions even when they are not a party to an underlying action.

[34]                          To preserve Equustek’s rights pending the outcome of the litigation, Tindale J.’s order of December 13, 2012 required Datalink to cease carrying on business through the Internet. Google had requested and participated in Equustek’s obtaining this order, and offered to comply with it voluntarily. It is common ground that Datalink was unable to carry on business in a commercially viable way unless its websites were in Google’s search results. In the absence of de-indexing these websites, as Fenlon J. specifically found, Google was facilitating Datalink’s breach of Tindale J.’s order by enabling it to continue carrying on business through the Internet. By the time Fenlon J. granted the injunction against Google, Google was aware that in not de-indexing Datalink’s websites, it was facilitating Datalink’s ongoing breach of Tindale J.’s order, the purpose of which was to prevent irreparable harm to Equustek.

[35]                          Much like a Norwich order or a Mareva injunction against a non-party, the interlocutory injunction in this case flows 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.

[36]                          Google’s next argument is the impropriety of issuing an interlocutory injunction with extraterritorial effect. But this too contradicts the existing jurisprudence.

[37]                          The British Columbia courts in these proceedings 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. Google does not challenge those findings. It challenges instead the global reach of the resulting order. Google suggests that if any injunction is to be granted, it should be limited to Canada (or google.ca) alone.

[38]                          When a court has in personam jurisdiction, and where it is necessary to ensure the injunction’s effectiveness, it can grant an injunction enjoining that person’s conduct anywhere in the world. (See Impulsora Turistica de Occidente, S.A. de C.V. v. Transat Tours Canada Inc., [2007] 1 S.C.R. 867, at para. 6; Berryman, at p. 20; Pitel and Valentine, at p. 389; Sharpe, at para. 1.1190; Spry, at p. 37.) Mareva injunctions have been granted with worldwide effect when it was found to be necessary to ensure their effectiveness. (See Mooney v. Orr (1994), 98 B.C.L.R. (2d) 318 (S.C.); Berryman, at pp. 20 and 136; Babanaft International Co. S.A. v. Bassatne, [1990] 1 Ch. 13 (C.A.); Republic of Haiti v. Duvalier, [1990] 1 Q.B. 202 (C.A.); Derby & Co. v. Weldon, [1990] 1 Ch. 48 (C.A.); and Derby & Co. v. Weldon (Nos. 3 and 4), [1990] 1 Ch. 65 (C.A.); Sharpe, at paras. 1.1190 to 1.1220.)

[39]                          Groberman J.A. pointed to the international support for this approach:

     I note that the courts of many other jurisdictions have found it necessary, in the context of orders against Internet abuses, to pronounce orders that have international effects. Several such cases are cited in the arguments of [International Federation of Film Producers Associations and International Federation of the Phonographic Industry], including APC v. Auchan Telecom, 11/60013, Judgment (28 November 2013) (Tribunal de Grande Instance de Paris); McKeogh v. Doe (Irish High Court, case no. 20121254P); Mosley v. Google, 11/07970, Judgment (6 November 2013) (Tribunal de Grande Instance de Paris); Max Mosley v. Google (see “Case Law, Hamburg District Court: Max Mosley v. Google Inc. online: Inform’s Blog https://inforrm.wordpress.com/2014/02/05/case-law-hamburg-district-court-max-mosley-v-google-inc-google-go-down-again-this-time-in-hamburg-dominic-crossley/) and ECJ Google Spain SL, Google Inc. v. Agencia Española de Protección de Datos, Mario Costeja González, C-131/12 [2014], CURIA.^[3]

[40]                          Fenlon J. explained why Equustek’s request that the order have worldwide effect was necessary as follows:

     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 [Datalink] websites from all search results generated by any of Google’s websites worldwide. I therefore conclude that [Equustek does] not have an out-of-court remedy available to [it].^[4]

 

. . .

 

     . . . to be effective, even within Canada, Google must block search results on all of its websites.^[5]

As a result, to ensure that Google did not facilitate Datalink’s breach of court orders whose purposes were to prevent irreparable harm to Equustek, she concluded that the injunction had to have worldwide effect.

[41]                          I agree. The problem in this case is occurring online and globally. The Internet has no borders — its natural habitat is global. The only way to ensure that the interlocutory injunction attained its objective was to have it apply where Google operates — globally. As Fenlon J. found, the majority of Datalink’s sales take place outside Canada. If the injunction were restricted to Canada alone or to google.ca, as Google suggests it should have been, the remedy would be deprived of its intended ability to prevent irreparable harm. Purchasers outside Canada could easily continue purchasing from Datalink’s websites, and Canadian purchasers could easily find Datalink’s websites even if those websites were de-indexed on google.ca. Google would still be facilitating Datalink’s breach of the court’s order which had prohibited it from carrying on business on the Internet. There is no equity in ordering an interlocutory injunction which has no realistic prospect of preventing irreparable harm.

[42]                          The interlocutory injunction in this case is necessary to prevent the irreparable harm that flows from Datalink carrying on business on the Internet, a business which would be commercially impossible without Google’s facilitation. The order targets Datalink’s websites — the list of which has been updated as Datalink has sought to thwart the injunction — and prevents them from being displayed where they do the most harm: on Google’s global search results.

[43]                          Nor does the injunction’s worldwide effect tip the balance of convenience in Google’s favour. The order does not require that Google take any steps around the world, it requires it to take steps only where its search engine is controlled. This is something Google has acknowledged it can do — and does — with relative ease. There is therefore no harm to Google which can be placed on its “inconvenience” scale arising from the global reach of the order.

[44]                          Google’s argument that a global injunction violates international comity because it is 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 is, with respect, theoretical. As Fenlon J. noted, “Google acknowledges that most countries will likely recognize intellectual property rights and view the selling of pirated products as a legal wrong”.^[6]

[45]                          And while it is always important to pay respectful attention to freedom of expression concerns, particularly when dealing with the core values of another country, I do not see freedom of expression issues being engaged in any way that tips the balance of convenience towards Google in this case. As Groberman J.A. concluded:

     In the case before us, there is no realistic assertion that the judge’s order will offend the sensibilities of any other nation. It has not been suggested that the order prohibiting the defendants from advertising wares that violate the intellectual property rights of the plaintiffs offends the core values of any nation. The order made against Google is a very limited ancillary order designed to ensure that the plaintiffs’ core rights are respected.

 

     . . . the order in this case is an interlocutory one, and one that can be varied by the court. In the unlikely event that any jurisdiction finds the order offensive to its core values, an application could be made to the court to modify the order so as to avoid the problem.^[7]

[46]                          If Google has evidence that complying with such an injunction would require it to violate the laws of another jurisdiction, including interfering with freedom of expression, it is always free to apply to the British Columbia courts to vary the interlocutory order accordingly. To date, Google has made no such application.

[47]                          In the absence of an evidentiary foundation, and given Google’s right to seek a rectifying order, it hardly seems equitable to deny Equustek the extraterritorial scope it needs to make the remedy effective, or even to put the onus on it to demonstrate, country by country, where such an order is legally permissible. 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.

[48]                          This is not an order to remove speech that, on its face, engages freedom of expression values, it is an order to de-index websites that are in violation of several court orders. We have not, to date, accepted that freedom of expression requires the facilitation of the unlawful sale of goods.

[49]                          And I have trouble seeing how this interferes with what Google refers to as its content neutral character. The injunction does not require Google to monitor content on the Internet, nor is it a finding of any sort of liability against Google for facilitating access to the impugned websites. As for the balance of convenience, the only obligation the interlocutory injunction creates is for Google to de-index the Datalink websites. The order is, as Fenlon J. observed, “only a slight expansion on the removal of individual URLs, which Google agreed to do voluntarily”.^[8] Even if it could be said that the injunction engages freedom of expression issues, this is far outweighed by the need to prevent the irreparable harm that would result from Google’s facilitating Datalink’s breach of court orders.

[50]                          Google did not suggest that it would be inconvenienced in any material way, or would incur any significant expense, in de-indexing the Datalink websites. It acknowledges, fairly, that it can, and often does, exactly what is being asked of it in this case, that is, alter search results. It does so to avoid generating links to child pornography and websites containing “hate speech”. It also complies with notices it receives under the US Digital Millennium Copyright Act, Pub. L. No. 105-304, 112 Stat. 2680 (1998), to de-index content from its search results that allegedly infringes copyright, and removes websites that are subject to court orders.

[51]                          As for the argument that this will turn into a permanent injunction, the length of an interlocutory injunction does not, by itself, convert its character from a temporary to a permanent one. As previously noted, the order requires that the injunction be in place “until the conclusion of the trial of this action or further order of this court”. There is no reason not to take this order at face value. Where an interlocutory injunction has been in place for an inordinate amount of time, it is always open to a party to apply to have it varied or vacated. Google has brought no such application.

[52]                          Datalink and its representatives have ignored all previous court orders made against them, have left British Columbia, and continue to operate their business from unknown locations outside Canada. Equustek has made efforts to locate Datalink with limited success. Datalink is only able to survive — at the expense of Equustek’s survival — on Google’s search engine which directs potential customers to its websites. In other words, Google is how Datalink has been able to continue harming Equustek in defiance of several court orders.

[53]                          This does not make Google liable for this harm. It does, however, make Google the determinative player in allowing the harm to occur. On balance, therefore, since the interlocutory injunction is the only effective way to mitigate the harm to Equustek pending the resolution of the underlying litigation, the only way, in fact, to preserve Equustek itself pending the resolution of the underlying litigation, and since any countervailing harm to Google is minimal to non-existent, the interlocutory injunction should be upheld.

[54]                          I would dismiss the appeal with costs in this Court and in the Court of Appeal for British Columbia.

        The following are the reasons delivered by

 

[55]                          Côté and Rowe JJ. (dissenting) — Equustek Solutions Inc., Robert Angus and Clarma Enterprises Inc. (“Equustek”) seek a novel form of equitable relief ― an effectively permanent injunction, against an innocent third party, that requires court supervision, has not been shown to be effective, and for which alternative remedies are available. Our response calls for judicial restraint. While the court had jurisdiction to issue the June 13, 2014 order against Google Inc. (“Google Order”) (2014 BCSC 1063, 374 D.L.R. (4th) 537, per Fenlon J.), in our view, it should have refrained from doing so. The authority to grant equitable remedies has always been constrained by doctrine and practice. In our view, the Google Order slipped too easily from these constraints.

[56]                          As we will explain, the Google Order is effectively final redress against a non-party that has neither acted unlawfully, nor aided and abetted illegal action. The test for interlocutory injunctions established in RJR ― MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, does not apply to an order that is effectively final, and the test for a permanent injunction has not been satisfied. The Google Order is mandatory and requires court supervision. It has not been shown to be effective, and there are alternative remedies available to Equustek.

I.               Judicial Restraint

[57]                          The power of a court to grant injunctive relief is derived from that of the Chancery courts of England (Fourie v. Le Roux, [2007] UKHL 1, [2007] 1 All E.R. 1087, at para. 30), and has been confirmed in British Columbia by the Law and Equity Act, R.S.B.C. 1996, c. 253, s. 39(1):

39 (1) An injunction or an order in the nature of mandamus may be granted or a receiver or receiver manager appointed by an interlocutory order of the court in all cases in which it appears to the court to be just or convenient that the order should be made.

[58]                          In Fourie, Lord Scott explained that “provided the court has in personam jurisdiction over the person against whom an injunction, whether interlocutory or final, is sought, the court has jurisdiction, in the strict sense, to grant it” (para. 30). However, simply because a court has the jurisdiction to grant an injunction does not mean that it should. A court “will not according to its settled practice do so except in a certain way and under certain circumstances” (Lord Scott, at para. 25, quoting from Guaranty Trust Co. of New York v. Hannay & Co., [1915] 2 K.B. 536, at p. 563; see also Cartier International AG v. British Sky Broadcasting Ltd., [2014] EWHC 3354 (Ch.), [2015] 1 All E.R. 949, at paras. 98-100). Professor Spry comes to similar conclusions (I. C. F. Spry, The Principles of Equitable Remedies (9th ed. 2014), at p. 333):

The powers of courts with equitable jurisdiction to grant injunctions are, subject to any relevant statutory restrictions, unlimited. Injunctions are granted only when to do so accords with equitable principles, but this restriction involves, not a defect of powers, but an adoption of doctrines and practices that change in their application from time to time. [Footnote omitted.]

[59]                          The importance of appropriately modifying judicial restraint to meet the needs of justice was summarized by Lord Nicholls in Mercedes Benz A.G. v. Leiduck, [1996] 1 A.C. 284 (P.C.), at p. 308: “As circumstances in the world change, so must the situations in which the courts may properly exercise their jurisdiction to grant injunctions. The exercise of the jurisdiction must be principled, but the criterion is injustice.”

[60]                          Changes to “settled practice” must not overshoot the mark of avoiding injustice. In our view, granting the Google Order requires changes to settled practice that are not warranted in this case: neither the test for an interlocutory nor a permanent injunction has been met; court supervision is required; the order has not been shown to be effective; and alternative remedies are available.

II.            Factors Suggesting Restraint in This Case

A.            The Effects of the Google Order Are Final

[61]                          In RJR ― MacDonald, this Court set out the test for interlocutory injunctions ― a serious question to be tried, irreparable harm, and the balance of convenience ― but also described an exception (at pp. 338-39):

Two exceptions apply to the general rule that a judge should not engage in an extensive review of the merits. The first arises when the result of the interlocutory motion will in effect amount to a final determination of the action. This will be the case either when the right which the applicant seeks to protect can only be exercised immediately or not at all, or when the result of the application will impose such hardship on one party as to remove any potential benefit from proceeding to trial. . . .

 

. . .

 

The circumstances in which this exception will apply are rare. When it does, a more extensive review of the merits of the case must be undertaken. Then when the second and third stages of the test are considered and applied the anticipated result on the merits should be borne in mind. [Emphasis added.]

[62]                          In our view, the Google Order “in effect amount[s] to a final determination of the action” because it “remove[s] any potential benefit from proceeding to trial”. In order to understand this conclusion, it is useful to review Equustek’s underlying claim. Equustek sought, in its Further Amended Notice of Civil Claim against Datalink, damages, declarations, and:

A temporary and permanent injunction restraining the Defendants from:

 

a.       using the Plaintiffs’ trademarks and free-riding on the goodwill of any Equustek products on any website;

 

b.      making statements disparaging or in any way referring to the Equustek products;

 

c.       distributing the offending manuals and displaying images of the Plaintiff’s products on any website; and

 

d.      selling the GW1000 line of products which were created by the theft of the Plaintiff’s trade secrets;

 

and obliging them to:

 

e.       immediately disclose all hidden websites;

 

f.        display a page on all websites correcting [their] misrepresentations about the source and continuing availability of the Equustek products and directing customers to Equustek.

In short, Equustek sought injunctions modifying the way in which Datalink carries out its website business, along with damages and declarations. On June 20, 2012, Datalink’s response was struck and Equustek was given leave to apply for default judgment. It has not done so. On December 13, 2012, Justice Tindale ordered that

[t]he Defendants Morgan Jack, Datalink Technologies Gateways Inc. and Datalink Technologies Gateways LLC (the “Datalink Defendants”) cease operating or carrying on business through any website, including those contained in Schedule “A” and all associated pages, subpages and subdirectories, and that these Defendants immediately take down all such websites, until further order of this court. [“December 2012 Order”]

The December 2012 Order gives Equustek more than the injunctive relief it sought in its originating claim. Rather than simply ordering the modification of Datalink websites, the December 2012 Order requires the ceasing of website business altogether. In our view, little incentive remains for Equustek to return to court to seek a lesser injunctive remedy. This is evidenced by Equustek’s choice to not seek default judgment during the roughly five years which have passed since it was given leave to do so.

[63]                          As for the Google Order, it provides Equustek with an additional remedy, beyond the December 2012 Order and beyond what was sought in its original claim. In our view, granting of the Google Order further erodes any remaining incentive for Equustek to proceed with the underlying action. The effects of the Google Order are final in nature. Respectfully, the pending litigation assumed by our colleague Abella J. is a fiction. The Google Order, while interlocutory in form, is final in effect. Thus, it gives Equustek more relief than it sought.

[64]                          Procedurally, Equustek requested an interlocutory order in the course of its litigation with Datalink. While Equustek’s action against Datalink could technically endure indefinitely (P. G. Fraser, J. W. Horn and S. A. Griffin, The Conduct of Civil Litigation in British Columbia (2nd ed. (loose-leaf)), at § 14.1) ― and thus the interlocutory status of the injunction could technically endure indefinitely ― it does not follow that the Google Order should be considered interlocutory. Courts of equity look to substance over form, because “a dogged devotion to form has often resulted in injustice” (John Deere Ltd. v. Firdale Farms Ltd. (1987), 45 D.L.R. (4th) 641 (Man. C.A.), at p. 645). In Parkin v. Thorold (1852), 16 Beav. 59, 51 E.R. 698, at p. 701, Lord Romilly explained it thus:

. . . Courts of Equity make a distinction in all cases between that which is matter of substance and that which is matter of form; and if [they do] find that by insisting on the form, the substance will be defeated, [they hold] it to be inequitable to allow a person to insist on such form, and thereby defeat the substance.

In our view, the substance of the Google Order amounts to a final remedy. As such, it provides Equustek with more equitable relief than it sought against Datalink, and amounts to final resolution via Google. It is, in effect, a permanent injunction.

[65]                          Following RJR ― MacDonald (at pp. 338-39), an extensive review of the merits is therefore required at the first stage of the analysis (Schooff v. British Columbia (Medical Services Commission), 2010 BCCA 396, 323 D.L.R. (4th) 680, at paras. 26-27). Yet this was not done. When Justice Fenlon considered Equustek’s application for an interim injunction enjoining Google to cease indexing or referencing Datalink’s websites, she did not conduct an extensive review of the merits. She did however note that Equustek had raised an arguable case, and that Datalink was presumed to have admitted the allegations when its defenses were struck (para. 151). The rule is not immutable that if a statement of defense is struck, the defendant is deemed to have admitted the allegations contained in the statement of claim. While the facts relating to Datalink’s liability are deemed to be admitted, the court can still exercise its discretion in assessing Equustek’s claims (McIsaac v. Healthy Body Services Inc., 2009 BCSC 1716, at paras. 42 and 44 (CanLII); Plouffe v. Roy, 2007 CanLII 37693 (Ont. S.C.J.), at para. 53; Spiller v. Brown (1973), 43 D.L.R. (3d) 140 (Alta. S.C. (App. Div.)), at p. 143). Equustek has avoided such an assessment. Thus, an extensive review of the merits was not carried out.

[66]                          The Google Order also does not meet the test for a permanent injunction.  To obtain a permanent injunction, a party is required to establish: (1) its legal rights; (2) that damages are an inadequate remedy; and (3) that there is no impediment to the court’s discretion to grant an injunction (1711811 Ontario Ltd. v. Buckley Insurance Brokers Ltd., 2014 ONCA 125, 371 D.L.R. (4th) 643, at paras. 74-80; Spry, at pp. 395 and 407-8). Equustek has shown the inadequacy of damages (damages are ascertainable but unlikely to be recovered, and the wrong is continuing). However, in our view, it is unclear whether the first element of the test has been met. Equustek’s claims were supported by a good prima facie case, but it was not established that Datalink designed and sold counterfeit versions of its product, or that this resulted in trademark infringement and unlawful appropriation of trade secrets.

[67]                          In any case, the discretionary factors affecting the grant of an injunction strongly favour judicial restraint. As we will outline below, the Google Order enjoins a non-party, yet Google has not aided or abetted Datalink’s wrongdoing; it holds no assets of Equustek’s, and has no information relevant to the underlying proceedings. The Google Order is mandatory and requires court supervision. It has not been shown to be effective, and Equustek has alternative remedies.

B.            Google Is a Non-Party

[68]                          A court order does not “technically” bind non-parties, but “anyone who disobeys the order or interferes with its purpose may be found to have obstructed the course of justice and hence be found guilty of contempt of court” (MacMillan Bloedel Ltd. v. Simpson, [1996] 2 S.C.R. 1048, at paras. 23 and 27). In MacMillan Bloedel, the injunction prohibiting named individuals from blocking a logging road also caused non-parties to face contempt proceedings for doing the act prohibited by the injunction.

[69]                          The instant case is not one where a non-party with knowledge of a court order deliberately disobeyed it and thereby deprecated the court’s authority. Google did not carry out the act prohibited by the December 2012 Order. The act prohibited by the December 2012 Order is Datalink “carrying on business through any website”. That act occurs whenever Datalink launches websites to carry out business ― not when other parties, such as Google, make it known that such websites exist.

[70]                          There is no doubt that non-parties also risk contempt proceedings by aiding and abetting the doing of a prohibited act (Seaward v. Paterson, [1897] 1 Ch. 545 (C.A.); D. Bean, A. Burns and I. Parry, Injunctions (11th ed. 2012), at para. 9-08). Lord Denning said in Acrow (Automation) Ltd. v. Rex Chainbelt Inc., [1971] 1 W.L.R. 1676 (C.A.), at p. 1682:

It has long been held that the court has jurisdiction to commit for contempt a person, not a party to the action, who, knowing of an injunction, aids and abets the defendant in breaking it. The reason is that by aiding and abetting the defendant, he is obstructing the course of justice.

[71]                          In our view, Google did not aid or abet the doing of the prohibited act. Equustek alleged that Google’s search engine was facilitating Datalink’s ongoing breach by leading customers to Datalink websites (Fenlon J.’s reasons, at para. 10). However, the December 2012 Order was to cease carrying on business through any website. That Order was breached as soon as Datalink established a website to conduct its business, regardless of how visible that website might be through Google searches. If Equustek’s argument were accepted, the scope of “aids and abets” would, in our view, become overbroad. It might include the companies supplying Datalink with the material to produce the derivative products, the companies delivering the products, or as Google argued in its factum, it might also include the local power company that delivers power to Datalink’s physical address. Critically, Datalink breached the December 2012 Order simply by launching websites to carry out business, regardless of whether Google searches ever reveal the websites.

[72]                          We agree with our colleague Justice Abella that Mareva injunctions and Norwich orders can operate against non-parties. However, we respectfully disagree that the Google Order is similar in nature to those remedies. Mareva injunctions are granted to freeze assets until the completion of a trial ― they do not enforce a plaintiff’s substantive rights (Mercedes Benz, at p. 302). In contrast, the Google Order enforces Equustek’s asserted intellectual property rights by seeking to minimize harm to those rights. It does not freeze Datalink’s assets (and, in fact, may erode those assets).

[73]                          Norwich orders are made to compel information from third parties. In Norwich Pharmacal Co. v. Customs and Excise Commissioners, [1974] A.C. 133 (H.L.), at p. 175, Lord Reid identified

a very reasonable principle that if through no fault of his own a person gets mixed up in the tortious acts of others so as to facilitate their wrong-doing he may incur no personal liability but he comes under a duty to assist the person who has been wronged by giving him full information and disclosing the identity of the wrongdoers.

Lord Reid found that “without certain action on [Customs’] part the infringements could never have been committed” (p. 174). In spite of this finding, the court did not require Customs to take specific action to prevent importers from infringing the patent of Norwich Pharmacal; rather the court issued a limited order compelling Customs to disclose the names of importers. In Cartier, the court analogized from Norwich to support an injunction requiring Internet service providers (“ISPs”) to block access to trademark-infringing websites because “it is via the ISPs’ services” that customers view and purchase the infringing material (para. 155). That injunction did not extend to parties merely assisting in finding the websites.

[74]                          In the case at bar, we are of the view that Google does not play a role in Datalink’s breach of the December 2012 Order. Whether or not the December 2012 Order is violated does not hinge on the degree of success of the prohibited website business. Rather, the December 2012 Order is violated merely by Datalink conducting business through a website, regardless of the visibility of that website or the number of customers that visit the website. Thus Google does not play a role analogous to Customs in Norwich nor the ISPs in Cartier. And unlike the order in Norwich, the Google Order compels positive action aimed at the illegal activity rather than simply requiring the provision of information to the court.

C.            The Google Order Is Mandatory

[75]                          While the distinction between mandatory and prohibitive injunctions has been questioned (see National Commercial Bank of Jamaica Ltd. v. Olint Corp., [2009] 1 W.L.R. 1405 (P.C.), at para. 20), courts have rightly, in our view, proceeded cautiously where an injunction requires the defendant to incur additional expenses to take positive steps (Redland Bricks Ltd. v. Morris, [1970] A.C. 652 (H.L.), at pp. 665‑66; J. Berryman, The Law of Equitable Remedies (2nd ed. 2013), at pp. 199-200). Also relevant to the decision of whether to grant a mandatory injunction is whether it might require continued supervision by the courts, especially where the terms of the order cannot be precisely drawn and where it may result in wasteful litigation over compliance (Co-operative Insurance Society Ltd. v. Argyll Stores (Holdings) Ltd., [1998] A.C. 1 (H.L.)).

[76]                          The Google Order requires ongoing modification and supervision because Datalink is launching new websites to replace de-listed ones. In fact, the Google Order has been amended at least seven times to capture Datalink’s new sites (orders dated November 27, 2014; April 22, 2015; June 4, 2015; July 3, 2015; September 15, 2015; January 12, 2016 and March 30, 2016). In our view, courts should avoid granting injunctions that require such cumbersome court-supervised updating.

D.            The Google Order Has Not Been Shown to Be Effective

[77]                          A court may decline to grant an injunction on the basis that it would be futile or ineffective in achieving the purpose for which it is sought (Spry, at pp. 419‑20; Berryman, at p. 113). For example, in Attorney General v. Observer Ltd., [1990] 1 A.C. 109 (H.L.), the Spycatcher memoirs of an M.I.5 agent were already readily available, thus making a perpetual injunction against publication by the defendant newspapers ineffective.

[78]                          In our view, the Google Order is not effective in enforcing the December 2012 Order. It is recalled that the December 2012 Order requires that Datalink “cease operating or carrying on business through any website” — it says nothing about the visibility or success of the website business. The December 2012 Order is violated as soon as Datalink launches websites to carry on business, regardless of whether those websites appear in a Google search. Moreover, the Google Order does not assist Equustek in modifying the Datalink websites, as Equustek sought in its originating claim for injunctive relief.

[79]                          The most that can be said is that the Google Order might reduce the harm to Equustek which Fenlon J. found “Google is inadvertently facilitating” (para. 152). But it has not been shown that the Google Order is effective in doing so. As Google points out, Datalink’s websites can be found using other search engines, links from other sites, bookmarks, email, social media, printed material, word-of-mouth, or other indirect means. Datalink’s websites are open for business on the Internet whether Google searches list them or not. In our view, this lack of effectiveness suggests restraint in granting the Google Order.

[80]                          Moreover, the quest for elusive effectiveness led to the Google Order having worldwide effect. This effect should be taken into consideration as a factor in exercising discretion. Spry explains that territorial limitations to equitable jurisdiction are “to some extent determined by reference to questions of effectiveness and of comity” (p. 37). While the worldwide effect of the Google Order does not make it more effective, it could raise concerns regarding comity.

E.             Alternatives Are Available

[81]                          Highlighting the lack of effectiveness are the alternatives available to Equustek. An equitable remedy is not required unless there is no other appropriate remedy at law (Spry, at pp. 402-3). In our view, Equustek has an alternative remedy in law. Datalink has assets in France. Equustek sought a world-wide Mareva injunction to freeze those assets, but the Court of Appeal for British Columbia urged Equustek to pursue a remedy in French courts: “At present, it appears that the proposed defendants reside in France. . . . The information before the Court is that French courts will assume jurisdiction and entertain an application to freeze the assets in that country” (2016 BCCA 190, 88 B.C.L.R. (5th) 168, at para. 24). We see no reason why Equustek cannot do what the Court of Appeal urged it to do. Equustek could also pursue injunctive relief against the ISPs, as was done in Cartier, in order to enforce the December 2012 Order. In addition, Equustek could initiate contempt proceedings in France or in any other jurisdiction with a link to the illegal websites.

III.          Conclusion

[82]                          For these reasons, we are of the view that the Google Order ought not to have been granted. We would allow the appeal and set aside the June 13, 2014 order of the Supreme Court of British Columbia.

                    Appeal dismissed with costs, Côté and Rowe JJ. dissenting.

                    Solicitors for the appellant: Lenczner Slaght Royce Smith Griffin, Toronto.

                    Solicitors for the respondents: Robert Fleming Lawyers, Vancouver; Michael Sobkin, Ottawa.

                    Solicitor for the intervener the Attorney General of Canada: Attorney General of Canada, Ottawa.

                    Solicitor for the intervener the Attorney General of Ontario: Attorney General of Ontario, Toronto.

                    Solicitors for the intervener the Canadian Civil Liberties Association: Blake, Cassels & Graydon, Vancouver.

                    Solicitor for the intervener the OpenMedia Engagement Network: Cynthia Khoo, Vancouver.

                    Solicitors for the interveners the Reporters Committee for Freedom of the Press, the American Society of News Editors, the Association of Alternative Newsmedia, The Center for Investigative Reporting, Dow Jones & Company, Inc., the First Amendment Coalition, First Look Media Works, Inc., the New England First Amendment Coalition, the News Media Alliance (formerly known as the Newspaper Association of America), AOL Inc., the California Newspaper Publishers Association, The Associated Press, The Investigative Reporting Workshop at American University, the Online News Association and the Society of Professional Journalists: Blake, Cassels & Graydon, Toronto.

                    Solicitors for the interveners Human Rights Watch, ARTICLE 19, Open Net (Korea), the Software Freedom Law Centre and the Center for Technology and Society: Blake, Cassels & Graydon, Toronto.

                    Solicitors for the intervener the Wikimedia Foundation: McInnes Cooper, Halifax.

                    Solicitors for the intervener the British Columbia Civil Liberties Association: Stockwoods, Toronto.

                    Solicitors for the intervener the Electronic Frontier Foundation: MacPherson Leslie & Tyerman, Vancouver; Fasken Martineau DuMoulin, Vancouver.

                    Solicitors for the interveners the International Federation of the Phonographic Industry, Music Canada, the Canadian Publishers’ Council, the Association of Canadian Publishers, the International Confederation of Societies of Authors and Composers, the International Confederation of Music Publishers and the Worldwide Independent Network: McCarthy Tétrault, Toronto.

                    Solicitors for the intervener the International Federation of Film Producers Associations: MacKenzie Barristers, Toronto.