Saturday, June 21, 2014

B.C. Court Orders Google To Block Website To Enforce Trade Secrets

The borderless nature of the internet has caused courts all over the world to address thorny questions dealing with their jurisdiction. On June 13, 2014, the Supreme Court of British Columbia joined those ranks in its decision in Equustek Solutions Inc. v. Jack, 2014 BCSC 1063. Madam Justice Fenlon ordered Google to block a website selling products that were made in violation of trade secrets. 

Image by mikeleeorg
The Plaintiff manufactures networking devices that allow interoperability between industrial equipment made by different manufacturers. The underlying action is based on the Plaintiff’s contention that the Defendant, a former distributor of the networking device, conspired with one of the Plaintiff’s employees to make and market a competing product based on the same technology. 

In the main action, the Court made an interim order restraining the Defendants from carrying on business in B.C. through any website. This is where Google comes in. The Plaintiff sent Google several  requests to take down a number of URLs on which they alleged the Defendant was marketing the infringing product. Google acceded to each one taking down 345 individual web pages but refused to take down an entire category of URLs. The Plaintiff brought an application for an interim injunction against Google, ordering them to stop indexing a category of URLs identified by the Plaintiff. 

Google argued that the B.C. Supreme Court had no jurisdiction over it because it has no real and substantial link with the forum. Google also argued that even if the Court does have jurisdiction, the injunction should not issue because: 1) “it would amount to a worldwide order that could not be enforced”; and 2) It would pose an undue burden on Google’s business operations. Madam Justice Fenlon dismissed all of these arguments and granted the injunction. 


On the matter of jurisdiction, the Court referred to the controlling law in B.C., the Court Jurisdiction and Proceedings Transfer Act, which essentially codifies the principles of private international law set out by the Supreme Court of Canada in numerous decisions. S.10 of the law lists a number of connecting factors a court is to consider when deciding whether to assert jurisdiction over a person. Justice Fenlon found that two of the factors were applicable in this case: 

-       10(a) - the application was “brought to enforce, assert, declare or determine proprietary or possessory rights or a security interest in property in British Columbia that is immovable or movable property…”; and 

-          10(h) - the application “concerns a business carried on in British Columbia”.

The Court acknowledged that since most of the sales of the infringing product occurred outside of B.C., the s.10(a) factor, though applicable, was weak. Most of the Court’s energy is spent dealing with the question of whether Google carries on business in B.C. in the meaning of s.10(h).

Google’s argument that it does not carry on business in B.C. was based heavily on the Supreme Court’s ruling in Club Resorts Ltd. v. Van Breda, 2012 SCC 17. In that case, two Ontario residents were seriously injured (one died) while at a resort in Cuba. The Supreme Court confirmed the decisions of the Courts below in ruling that the Ontario Superior Court of Justice had jurisdiction over the claims because the contract between the parties was entered into in Ontario. The part of that decision that interested Google was where Justice LeBel said that “The notion of carrying on business requires some form of actual, not only virtual, presence in the jurisdiction, such as maintaining an office there or regularly visiting the territory of the particular jurisdiction.”

The Court pointed out that Google failed to cite the very next sentence in which Justice LeBel admits that the comment above was made in obiter. Justice Fenlon distinguished the current case from Van Breda on the grounds that unlike that case, the current matter deals with e-commerce. Still, the Court agreed with the proposition that the mere fact that a person in B.C. can access a website does not automatically mean that the owner of the website is carrying on business in the Province. 

In order to determine whether Google is carrying on business in B.C., the Court turned to assessing the nature of Google’s service. The prevailing jurisprudence in the United States (which has been cited with approval by Canadian courts. see Braintech, Inc. v. Kostiuk, 1999 BCCA 169 [Braintech], Pro-C Ltd. v. Computer City Inc., [2000] O.J. No. 2823 (S.C.J.)) makes a distinction between active and passive websites. Passive websites are information based, offer little interactivity and tend to have a local focus. By contrast, active sites tend to be highly interactive, e-commerce oriented and multi-jurisdictional in focus. 

Despite Google’s claim that the search website is passive, the Court found that it was active. In addition to the fact that Google’s website has an international reach, Justice Fenlon honed in on the fact that when a person begins to type in the Google search bar, the website automatically anticipates the search request by serving up a list of potential search terms. She also noted that Google offered its advertising services to B.C. businesses (including the Defendants in the main action) and served ads to B.C. residents.

Google’s other arguments on why the injunction should not issue

An injunction is an extraordinary remedy that should only be granted if there is no other satisfactory remedy available at law. Google argued that there was another remedy available, namely to continue providing Google with takedown requests as they come. The Court disagreed. Given the fact that Google had already de-indexed nearly 350 URLs to no effect, the Court did not feel that forcing the Plaintiff to continue with this approach was an effective remedy.

On this point, the Court cited a French decision, Max Mosely v. Google France SARL and Google Inc., in which Google was forced to block images from its image search results. In that case, Rupert Murdoch’s News of the World secretly filmed Max Mosely engaging in sexual conduct. In a criminal trial, the newspaper was found guilty. At this point, however, the images were so widely circulated that one could find them by doing a simple Google search. As in the present case, Mosely asked Google to take down specific URLs and Google complied. The French court ordered Google to block the images entirely finding Google’s takedown process to be ineffective.

Google made arguments as to the enforceability of a B.C. Court order against them. Google is a Delaware Corporation based in California. Traditionally, injunctions are not issued against parties that reside outside of the Courts jurisdiction. The reason for this is simple: breaching the terms of an injunction amounts to contempt of court. Contempt is usually punished by fines and/or imprisonment. It is hard to enforce these measures against a party that does not reside or have any property located in a jurisdiction. 

While she did not address this point decisively, Justice Fenlon noted a recent trend of courts enforcing interlocutory injunctive orders made in other jurisdictions. She cites Cavell Insurance Co. Ltd. (Re) and Minera Aquiline Argentina SA v. IMA Exploration Inc. in which the Ontario Court of Appeal and the B.C. Court of Appeal respectively enforced or endorsed the enforcement of foreign interlocutory orders. She also noted that the Court could get creative should Google refuse to follow the order. For example, the Court could bar Google from undertaking any legal actions in the Province until the order is complied with.

Google also argued that an injunction should not be made against a person that is not a party to the main action. This general rule has two exceptions: 1) when the non-party knowingly disobeys the court order; and 2) when granting the injunction will “aid in the fact finding necessary to the administration of justice”. This second exception is what is often referred to as a Norwich order and is based on the U.K. House of Lords decision in Norwich Pharmacal Co. & Ors v Commissioners of Customs and Excise

The first exception obviously does not apply. Google argued that the Norwich line of cases should not be read to extend so far as to allow a court to restrain the conduct of a non-party. They argued that a court should only be allowed to compel an innocent party to produce documents for discovery purposes. The Court disagreed. 

While the Norwich case does not set a precedent for the kind of order sought in this case, Justice Fenlon makes clear that her equitable jurisdiction is not fettered by precedent. Courts of inherent jurisdiction are granted a broad discretionary power to award equitable remedies to ensure that justice is served. While Google is right that this order goes beyond the reasoning in Norwich, this does not seem to faze Justice Fenlon. 


This is an important decision that may prove to affect a wide-range of areas, not the least of which being intellectual property. While the IP rights at the heart of the main action were not important to the Courts reasons here, this case stands for the proposition that ISPs may be compelled to take down infringing content when they are not a party to the action. These reasons represent the continuing shift of courts adapting the law to the borderless internet. 

Classifying Google’s website as active seems to me to be the right decision. Search engines are nothing if not interactive. By their very nature they require the interaction of an individual to perform their function. The fact that Google’s advertising division services B.C. businesses and serves ads to B.C. residents in a targeted fashion also militates in favour of a finding that Google’s website is active in nature. 

One of Google’s arguments was essentially a lament that if the Court ruled against them, it would be a statement to the effect that an internationally used service like Google could be dragged into court anywhere in the world. I certainly understand their perspective. It is precisely that type of eventuality that the rules of international private law seek to avoid. That said, it seems that at least one judge is unwilling to let such trifling matters stand in the way of Equity!

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