Throwback Thursday: Equustek v. Google
September 29, 2022
This year marks the fifth anniversary of the Supreme Court of Canada’s decision in Equustek v. Google, in which Canada’s highest court became one among a select few to order an internet intermediary to remove information from its services on a worldwide basis. The decision in Equustek aroused angst and controversy out of fear that other courts—especially in authoritarian states—would cite it to support worldwide application of their laws governing internet content. If Canada can order Google to remove certain websites from its search engine for violating Canadian law, why can’t Thailand do so to enforce its lèse-majesté laws, or Saudi Arabia for its blasphemy laws?
Five years on, these scenarios have not come to pass —not because states of all stripes are uninterested in enforcing their laws online, but rather because the battleground for regulating large technology companies has shifted from courts to legislatures. Around the world, governments are enacting data localization, physical presence, and prompt removal obligations on internet intermediaries to ensure that large online platforms follow their laws. Even so, it is worth revisiting the Equustek decision to understand why the case was so controversial, and what its enduring legacy might be in debates over the future of internet governance.
The Case in Brief
Equustek is a small technology company based in the Canadian province of British Columbia (B.C.). The company brought suit against Datalink—a distributor of its products founded by a former Equustek employee—and various individuals associated with Datalink (collectively, the “Datalink defendants”) for misappropriating Equustek’s trade secrets to sell competing products. The Datalink defendants initially defended themselves against Equustek’s claims in court, but some of the defendants (including the company itself and its founder, Morgan Jack) abandoned their defenses and fled Canada. Equustek obtained multiple court orders requiring the Datalink defendants to cease and desist, but they continued to market various products that, in Equustek’s view, infringed on Equustek’s IP rights. The court subsequently issued a warrant for Mr. Jack’s arrest for contempt of court, but he remains at large to this day.
As the proceedings against Datalink ground their way through the B.C. court system, Equustek turned its attention to Google. Reasoning that Datalink could not reach its customers but for the role played by Google’s search engine in making its wares findable, Equustek sought an interlocutory injunction against Google directing it to “de-index” websites associated with Datalink. This would require Google’s search engine to stop indexing the content on the Datalink websites, which would in turn prevent the Google search engine from providing links to these websites in response to search queries.
Google offered to de-index from its Canadian search service (google.ca) several hundred individual webpages on various Datalink websites that advertised products that might infringe on Equustek’s IP rights, but this was insufficient for Equustek. According to Equustek, the Datalink defendants could simply create new pages on their existing sites to evade this ban, creating a “whack-a-mole” situation. Further, Equustek wanted Google to de-index the Datalink websites not just from its Canadian search service, but rather on a worldwide basis to prevent sales of the allegedly infringing goods outside Canada.
The B.C. Supreme Court—the provincial trial court—granted Equustek the injunction it sought, and both the B.C. Court of Appeal and the Supreme Court of Canada affirmed. Applying the standard three-factor test for issuing interlocutory injunctions in Canada, all three courts found a substantial issue to be tried in the underlying Equustek v. Datalink litigation and that Equustek had demonstrated irreversible harm from Datalink’s ongoing IP infringement. The decisions of all three courts focused on the third factor—the balance of convenience—and on the jurisdictional defenses and policy arguments raised by Google.
Google’s Jurisdictional Defenses
Google opposed Equustek’s injunction on jurisdictional grounds. Specifically, the tech giant argued that the B.C. courts lacked territorial competence over the proceedings and jurisdiction in personam over Google. The B.C. Supreme Court and Court of Appeal dispatched with Google’s territorial competence argument easily, finding a “real and substantial connection” between B.C. and Equustek’s prayer for relief. The two lower courts rejected Google’s contention that its lack of physical presence in B.C. meant that the tech giant could not be haled into the province’s courts. The trial court found that it had jurisdiction in personam over Google based on the large volume of business the company conducted in B.C. from its headquarters in California—including ad sales and data collection activities.
The Supreme Court Majority
Google abandoned its jurisdictional defenses before the Supreme Court and focused instead on the propriety of a Canadian court issuing a worldwide interlocutory injunction against a non-party both as a general matter and in view of the specific circumstances of the case.
Writing for a seven-justice majority, Justice Rosalie Abella began by noting that the common law has long supported the issuance of injunctions against non-parties to a dispute, such as to assist with discovery (Norwich orders), or to preserve assets pending a judgment (Mareva injunctions). Courts in Canada and other common law jurisdictions routinely issue such injunctions against non-parties on an extraterritorial or worldwide basis (assuming that the court has personal jurisdiction over the non-party). Moreover, the balance of convenience in this case favored Equustek because it was easy for Google to de-index the Datalink websites.
Although Google and numerous intervenors in the proceedings (the Canadian equivalent of amici curiae) argued that a worldwide de-indexing order posed risks to free expression, the majority disagreed. Justice Abella noted that Google had not proffered any evidence showing that “complying with such an injunction would require it to violate the laws of another jurisdiction, including interfering with freedom of expression.” (Para. 46). Furthermore, the injunction was “not an order to remove speech that, on its face, engages freedom of expression values,” but rather one that requires Google to de-index websites engaged in “the unlawful sale of goods.” (Para. 48). Nor were there any comity concerns with a worldwide injunction just “because it is possible that the order could not have been obtained in a foreign jurisdiction.” (Para. 44) While a Canadian court might vary or strike the injunction upon a showing that Google’s compliance would violate foreign law or interfere with a “core value” of another state, there was no such showing by Google in the current case. The injunction was upheld.
In their joint dissenting reasons, Justices Suzanne Côté and Malcolm Rowe disagreed with many of the premises underlying the majority opinion. Specifically, they characterized the order against Google as a final injunction in the guise of an interlocutory one, because in their view it “amounted to a final determination of the action” in the convoluted circumstances of the underlying litigation. The dissenting justices were concerned that Equustek would no longer have any incentive to proceed to trial, because the equitable relief it obtained through interlocutory injunctions exceeded what it sought in its statement of claim (as complaints are called in Canada). This posed a further problem because the merits of Equustek’s underlying IP claims against the Datalink defendants had yet to be proven in court.
The dissenting justices also questioned the effectiveness of the injunction, given that the Datalink websites could be found by many other means. They also counseled for judicial restraint in the circumstances of the case, which involved a novel worldwide injunction being issued against a non-party online intermediary.
U.S. Court Action
Following Yahoo’s example in another famous internet law case, Google commenced an action in the U.S. District Court for the Northern District of California seeking a declaration that the Canadian injunction was unenforceable in the United States because it violated Section 230 of the Communications Decency Act. This controversial provision provides online intermediaries with immunity for harms relating to content authored by third parties but made available by their services. Section 230 therefore protects Google from a defamation action based on Google’s search engine that makes a defamatory webpage searchable, or from an invasion of privacy suit if it indexed non-consensual intimate imagery. Section 230 is not unlimited, however. Under the Digital Millennium Copyright Act, online intermediaries must provide copyright owners with a mechanism to flag online content that violates their copyright and promptly take down or de-index such content in order to enjoy a “safe harbor” against copyright liability.
Google got what it wanted from the Northern District of California. Judge Edward Davila found that “the Canadian order would eliminate Section 230 immunity for service providers that link to third-party websites.” He ruled the order was unenforceable in the United States as it “undermines the policy goals of Section 230 and threatens free speech on the global internet” by “forcing intermediaries to remove links to third-party material.”
Back to B.C.
With this declaratory judgment in hand. Google went back to the B.C. Supreme Court and sought to have the injunction quashed or modified. The Court was unmoved by Judge Davila’s decision, however. It noted that the declaratory judgment did not find that the Canadian injunction violated U.S. law. Rather, the injunction merely deprived Google in Canada of protections it enjoyed in the United States. The Court noted:
injunctions frequently restrained conduct that would otherwise be prima facie lawful. A party being restricted in its ability to exercise certain rights is not the same thing as that party being required to violate the law. (Para 20.)
Furthermore, the declaratory judgment did not establish that the Canadian judgment conflicted with a “core value” of the U.S. legal system that might justify the modification of the injunction based on comity. Section 230 might advance First Amendment values, but nothing about the Canadian injunction violated the First Amendment itself.
Google apparently complied with the injunction following the 2018 decision of the B.C. Supreme Court as there has been no further litigation between Google and Equustek in the B.C. Courts. There is, however, no publicly available information that specifies exactly how Google is complying with the injunction. Equustek’s case against the Datalink defendants proceeded to trial in 2018, and in 2020 the B.C. Supreme Court issued a judgment on the merits that was largely in favor of Equustek. The case is still before the courts, however, as Equustek has appealed the dismissal of several of its claims against a number of the Datalink defendants.
The Significance of the Case
Equustek v. Google received more international attention than any other Canadian judicial decision in recent memory. More than 30 parties intervened in the proceedings, and the case has been the subject of extensive commentary and scholarly analysis in Canada and beyond.
Remarkably, five years on, the Equustek decision remains an outliner. Few are the courts that have followed the Canadian Supreme Court in issuing content removal orders that apply beyond their borders. Notably, in 2019, the Court of Justice of the European Union ruled that, barring exceptional circumstances, the “right to be forgotten” applies only within the European Union. In so ruling, the CJEU noted that many states do not recognize the “right to be forgotten” and that the wording of the General Data Protection Regulation, which establishes this right, did not specify whether this right applies extraterritorially. The facts of this case are therefore distinguishable from Equustek, in that a strong global consensus exists against the misappropriation of intellectual property, even if global de-indexing orders remain controversial.
Cases like Equustek might be rare because governments seeking to enforce their laws online are enacting legislation to do so, rather than relying on the courts. Instead of seeking to apply their law extraterritorially, most governments are seeking to re-territorialize the internet by requiring international internet companies to respect their national law when serving users located on their territory. The European Union’s Digital Services Act is the most ambitious of these regulatory efforts, and its enactment has been widely regarded as a positive development. Less welcome, however, are the onerous new laws that countries that have taken an authoritarian turn in recent years are imposing on major internet platforms. For example, India is increasingly requiring foreign internet companies to store data pertaining to local users on servers located on their soil, while India and Nigeria are among a host of countries that are mandating that foreign technology companies open offices on their territory to enhance their jurisdictional leverage against them.
Meanwhile, Equustek may no longer be good law in Canada. Section 19.17 of the United States-Mexico-Canada Agreement (“USMCA”) provides online intermediaries operating in the North American market with intermediary liability protections that are strikingly similar to CDA §230. Correspondingly, it is not clear whether a Canadian court could issue an injunction similar to the one in Equustek without violating the USMCA.
Finally, it is worth considering how decisions such as Equustek in which courts seek to regulate online activities beyond their borders interact with the distribution of regulatory power over the internet. Charles de Gaulle famously railed against the “exorbitant privileges” the United States enjoys by virtue of the dollar serving as the global reserve currency. We can say something similar about the power the United States enjoys over the internet by virtue of the leading online providers (such as Google, Meta, and Microsoft) being based in the United States. Correspondingly, orders directed by U.S. courts at such companies often have extraterritorial effects, for they shape how such companies do business around the world. Furthermore, had the Equustek case arisen in the United States, it is possible that the Department of Justice would simply have seized the domain names from which the Datalink defendants operated. Courts have ruled that .com domain names are subject to in rem proceedings in the Eastern District of Virginia because that is where the central registry of all such domain names is maintained. Such action would have knocked the Datalink websites off the global internet, as was the case when the Departmentof Justice acted against New Zealand-based megaupload.com (a piracy website) several years ago.
In a world where everything online is interconnected, traditional notions of territorial and extraterritorial jurisdiction are difficult to apply with the same precision as in the physical world. As governments around the world grapple with the challenges of regulating online spaces, the value of all branches acting with “a decent respect to the opinions of mankind” is perhaps more important than ever.