Interlegal News Update - November 2017 - The Long Arm of the (Canadian) Law

Canada is somewhat famous for its arms. The Canadarm in particular: A highly sophisticated crane with which the American Space Shuttles were equipped to deploy and manipulate payload. Over the decades during which it was used, it made the Space Shuttles better and more effective.

We, at Yulex, are happy to report our judicial system now has its equivalent. Well, sort of...

On June 28th, last, the Supreme Court of Canada, our highest tribunal, rendered a decision which increased the effectiveness of our courts, by confirming their ability to render injunctive orders, with global effects.

The case Equustek Solutions Inc. v. Google1 stems from our most western Province, British Columbia, where plaintiff, Equustek, manufactures “complex industrial equipment made by one manufacturer to communicate with complex industrial equipment made by another manufacturer”, which was sold mainly through web-sales.

In 2001, Equustek discovered that one of its online distributors, Datalink, began to “re-label one of its products and pass it off as its own”. According to Equustek, Datalink also “acquired confidential information and trade secrets belonging to Equustek, using them to design and manufacture a competing product”. As one would expect, Equustek sued Datalink requesting both damages and injunctive relief, the latter of which it obtained at the onset of the proceedings. By and large, the injunctive orders rendered against Datalink “prohibited the sale of its inventory and the use of Equustek’s intellectual property”.

Datalink contested Equustek assertions, and effectively defied the cease and desist injunctive orders rendered in first instance. When faced with contempt of court, Datalink and its

1 Google Inc. v. Equustek Solutions Inc., 2017 SCC 34

representatives fled Canada and continued to carry on its business, on the web, from an unknown location.

Equustek then turned to the Datalink’s primary supplier, who allowed it to carry on its business: Google.

Equustek brought court proceedings against Google, seeking an order requiring it to “de-index Datalink’s website”. Google contested same, but eventually did voluntarily de-index “345 specific webpages associated with Datalink. It did not, however, de-index all of Datalink’s websites” that is only those which could be found on Google Canadian site (www.google.ca). The result was ineffective as “Datalink simply moved the objectionable content to new pages within its websites, circumventing the court orders”.

Equustek therefore pressed on against Google and obtained an interlocutory injunction precluding it from “displaying any part of Datalink’s websites on any of its search results worldwide”. The Court of Appeal for British Columbia dismissed Google’s appeal and Google appealed to the Supreme Court of Canada.

The Supreme Court of Canada dismissed the appeal, thereby confirming the injunctive relief initially obtained against Google. Setting aside the procedural issues raised in Google’s defense, the case is interesting to us in two respects.

Non-party involvement

First, relying on the fact that “injunction are equitable remedies”, the court reiterated that injunctive relief can be sought against non-parties to the suit. While finding foothold in similarities with Norwich2 and Mareva3 type injunctions, the court confirmed that third parties to a suit, even in the absence of any wrong doing, could be compelled by injunctive orders if they somehow assisted and (or) facilitated the defiance of a court order or in causing irreparable harm.

It should be noted that, in this respect, the Supreme Court relied somewhat in on decision rendered this year by a UK Court of Appeal4.

Global effect

Secondly and most importantly, the Supreme Court dismissed Google’s argument which raised the “impropriety of issuing an interlocutory injunction with extraterritorial effect”.

The Supreme Court reiterated Canadian case law which confirmed the court’s power to compel a person’s conduct “anywhere in the world”, which in our view, related to any specific place in

2 Norwich orders are 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).
3 Mareva injunctions are used, in Canada, to freeze assets in order to prevent their dissipation pending the conclusion of a trial or action (Mareva Compania Naviera SA v. International Bulkcarriers SA, [1975] 2 Lloyd’s Rep. 509 (C.A.).
4 Cartier International AG v. British Sky Broadcasting Ltd., [2017], 1 All E.R. 700 (C.A.), 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.

the world. However, this case differed in that the effect of the order was global; all- encompassing, if you will.

In the word of Justice Abella : “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.”

It should also be noted that both the British Columbia Court of Appeal and the Supreme Court of Canada relied on case law from France5, Ireland6, Germany7 and Spain8, all of which confirmed, “in the context of orders against Internet abuses”, the legality of court order that have “international effects”.

In closing, should your client wish to assert their rights to protect their intellectual property, the Canadian Court now have a very long reach and that is certainly something to keep in mind.

By: Dominique Lavin, Partner
YULEX, Attorneys & Strategists, LLP (Canada)