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B.C. ruling on jurisdiction over Google ‘disastrous’

|Written By Julius Melnitzer

In the most expansive decision in the common law world to date, the B.C. Court of Appeal has upheld an order requiring Google Inc., a foreign entity that’s not a named defendant in the main proceedings, to remove a company’s web sites from all of its worldwide search results.

‘I don’t think the court has thought through the implications for Canadian business abroad or for the way other countries will regulate what Canadians can do here,’ says Ren Bucholz.

The case sends a clear message that Canadian courts are increasingly willing to ignore provincial and national borders in order to uphold justice in the business world.

“The long arm of Canadian law has certainly become much longer,” says Scott MacKendrick of Bereskin & Parr LLP in Toronto.

But not everyone’s happy about it.

“The decision is disastrous, although it’s in line with other Canadian decisions that have seized jurisdiction over entities operating in Canada and tried to regulate not only what these entities can do in Canada but also in the rest of the world,” says Ren Bucholz of Lenczner Slaght Royce Smith Griffin LLP in Toronto. “I don’t think the court has thought through the implications for Canadian business abroad or for the way other countries will regulate what Canadians can do here.”

Bucholz’ concern is the appeal court took jurisdiction over Google even though the company’s singular connection to the province was that it indexed Canadian web sites and advertised in British Columbia.

“If that’s the standard for jurisdiction, then go ahead and declare what Google can do elsewhere on the planet,” he says. “But while we might trust three Canadian appellate judges to make the right decision about a given issue, what are we going to when courts in other countries with different standards start to apply local standards to global conduct, including conduct in Canada?”

According to Bucholz, there’s nothing in Equustek Solutions Inc. v. Google Inc. that distinguishes the principles enunciated from analogous decisions emanating from other countries whose laws and norms don’t conform to Canadian law or standards.

“What happens when an Egyptian court decides that certain Google content is not acceptable and orders Google to scrub that material from its global index?” he asks. “Issues like that highlight the need for a principled debate as to the extent to which local decisions should be allowed to hamstring the global Internet.”

The case arose when Equustek, a company that manufactures computer-networking devices, claimed the named defendant had stolen trade secrets while working for the company and then used them to develop and sell its own products online.

The defendants had flagrantly disobeyed various court orders, including one prohibiting them from doing business online. Previously, Google had complied with Equustek’s request to remove links to the defendants’ web sites from google.ca but refused to do the same for searches originating from other Google web sites.

Equustek asked the court for an interim injunction prohibiting Google from displaying the defendants’ web sites in any search results. Google resisted the application, arguing the court didn’t have jurisdiction over it as it isn’t a B.C. company and the injunction sought didn’t relate to its activities in British Columbia or Canada.

But both the lower court judge and the Court of Appeal concluded Google was carrying on business in the province because it sold advertising to B.C. clients, an activity inextricably linked to its search engine. The ad revenue also paid for the search engine’s operation.

The upshot was that the B.C. courts had territorial jurisdiction over Google. That was enough to justify a global order.

“Once it is accepted that a court has in personam jurisdiction over a person, the fact that its order may affect activities in other jurisdictions is not a bar to it making an order,” the motions judge concluded, a view accepted by a unanimous appeal court.

The decision has many implications. “The impact will be significant for cases involving everything from e-commerce to misuse of confidential information and defamation,” says Mark Fancourt-Smith of Lawson Lundell LLP in Vancouver.

“And there will only be more to come.”

If a right to be forgotten, for example, crystallized in Canada, the beneficiaries of it could conceivably obtain extraterritorial orders from the Canadian courts to delete references worldwide. That, of course, would make any order far more effective from a practical standpoint.

Indeed, in finding the court had territorial jurisdiction over Google, the motions court judge referred to the recent European Court of Justice decision in the case about the right to be forgotten. While the appeal court didn’t address her specific observations on the decision, it did refer to the ruling itself.

“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,” the Court of Appeal stated, going on to list a number of cases from around the world, including the European ruling.

What’s clear then, is that the delicate balancing act in deciding these types of cases represents a global conundrum.

“Courts everywhere will have to come to terms with how to balance the rights of an innocent foreign non-party with the need to enforce its process and authority in the face of brazen contempt and to what extent search-engine providers may be pressed into service to enforce court orders against others,” says Fancourt-Smith.

  • James Wagner
    While the idea of an internet company being forced to remove pages globally in response to activities of a third party can certainly lead to abuse, the injunction itself seems to have been necessary and properly tailored.

    Companies are increasingly going global, but realizing that that requires playing with a global set of rules. One response to this is the strong push to harmonize the rules (free trade agreements, etc.) A second response is the need to be strategic as to which countries to expand into. Natural resource companies need to carefully consider the risk of asset forfeiture and environmental and employment liabilities and costs in each jurisdiction. What we will see more of in the future is technology companies becoming more and more cognizant of what countries they want to do business in, whether the risk is injunctions, copyright laws, or government spying; Google is a good example of this, having already left the market in China due to the local laws there.
  • Brian Gray
    The injunction clearly was in aid of preventing the counterfeiting activities in BC which were unintentionally facilitated by the Google search engine.
    Google was not merely advertising in BC but was selling advertising in BC to BC residents and at least for some period of time (according to the decision) they were even advertising the allegely counterfeit products of the defendants.
    i agree with Roger, this is not disastrous expansion of jurisdiction but a nuanced order based on a specific set of facts.
  • Roger Watkiss
    The court addressed the comity issue and determined that there was no realistic assertion that the order would "offend the sensibilities of any other nation".

    This case deals with an order prohibiting the advertising of goods that all concerned appear to acknowledge violate the intellectual property rights of the plaintiffs. In addition, the defendants were clearly making ongoing efforts to avoid earlier orders. Neither Google nor the intervenors suggested that the earlier orders constiuted an intrusion on free speech.

    To suggest that this case reflects some unbridled expansion of international jurisdiction by the B.C. courts is way off base and misleading. One only needs to look at Douez vs. Facebook to see how far they are willing to go in respect of privacy matters.

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