By Thomas Long, J.D.
British Columbia-based technology company Equustek Solutions Inc. was entitled to an interlocutory injunction barring Google Inc. from indexing or referencing Internet search results relating to websites operated by a former Equustek distributor, which allegedly, in breach of several court orders, was using those websites to unlawfully sell products that infringed Equustek’s intellectual property, including trade secrets and trademarks, the Supreme Court of Canada has held. Google could be subject to the injunction, even though it was not a party to the lawsuit between Equustek and Datalink. The injunction could be applied extraterritorially because, for the relief to be effective, it would need to apply worldwide. Google did not provide evidence that it would suffer inconvenience or economic harm from being enjoined, or that complying with the injunction would cause it to violate the laws of other jurisdictions (Google Inc. v. Equustek Solutions Inc., June 28, 2017, Abella, R.).
Equustek manufactured networking devices that allowed complex industrial equipment made by one manufacturer to communicate with complex industrial equipment made by another manufacturer. Equustek brought suit in a British Columbia court against Datalink Technology Gateways Inc. and Datalink Technologies Gateways LLC (together, "Datalink"), asserting that Datalink, while serving as a distributor of Equustek’s products, began to re-label one of the products and pass it off as its own. Datalink also allegedly acquired confidential information and trade secrets belonging to Equustek, using them to design and manufacture a competing product. The court 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. Datalink did not comply with the injunction, and additional injunctions were issued in order to compel Datalink to stop its infringing activity. Equustek then asked Google to de-index the Datalink websites. When Google declined to do so, Equustek sought a court order against Google. Although Google then de-indexed certain of Datalink’s webpages, it did not remove links to entire websites, and Google’s remedial actions were not effective in stopping Datalink from selling counterfeit products through its websites. Equustek then sought and obtained an interlocutory injunction barring Google from displaying any part of the Datalink websites on any of its search results worldwide. Google appealed to the Supreme Court of Canada.
The test for determining whether the court should exercise its discretion to grant an interlocutory injunction against Google was met, the court said. There was a serious issue to be tried, Equustek was suffering irreparable harm as a result of Datalink’s ongoing sale of its competing product through the Internet, and the balance of convenience was in favor of granting the injunction. Google did not dispute that there was a serious claim or that Equustek was suffering irreparable harm that Google was inadvertently facilitating through its search engine. Nor did Google contend that it would be seriously inconvenienced or that it would incur significant expense if it were required to de-index the distributor’s websites. Instead, Google argued that the injunction was not necessary to prevent irreparable harm to Equustek, that the injunction would not be effective, that as a non-party it should be immune from the injunction, that there was no necessity for the extraterritorial reach of the order, and that there were freedom of expression concerns weighing against the imposition of an injunction.
First, the court stated that injunctive relief could be imposed on someone who was not a party to an underlying lawsuit, if the activities of the non-party facilitated the harm done by the wrongful acts of others. It was undisputed that Datalink could not do business in a commercially viable way without its websites appearing on Google. The injunction therefore flowed from the necessity of Google’s assistance to prevent the facilitation of Datalink’s ability to defy court orders and do irreparable harm to Equustek. In addition, the court pointed out that it could grant an injunction enjoining conduct anywhere in the world. The harm being addressed in this case was occurring globally, and the only way for the injunction to be effective was for it to apply globally. Google had not presented evidence that its compliance with the injunction would cause it to violate the laws of another jurisdiction.
Dissenting opinion. Justices Cote and Rowe wrote in dissent, arguing that principles of judicial restraint should have led the court to refrain from issuing the injunction. First, the injunction against Google amounted in effect to a final determination of the action because it removed any potential benefit from proceeding to trial, the dissenting justices said. The injunction against Google gave Equustek more equitable relief than it sought against Datalink and was final in nature, even though it was interlocutory in form. Although Equustek had made out a prima facie case, it had not conclusively established that Datalink designed and sold counterfeit versions of Equustek’s product, or that this conduct resulted in trademark infringement and unlawful appropriation of trade secrets, the dissenting justices pointed out. Second, Google was a non-party that did not aid or abet Datalink’s breach of court orders. Third, the injunction was unduly cumbersome; it would require ongoing court-supervised modification because Datalink was launching new websites to replace de-listed ones. Finally, the dissenting justices argued that Equustek had available alternative remedies, such as seeking a freeze of Datalink’s assets in France and pursuing injunctive relief against the Internet service providers that facilitated the offending websites.
The case is No. 36602.
Attorneys: Marguerite Ethier (Lenczner Slaght Royce Smith Griffin LLP) for Google Inc. Robbie Fleming (Robert Fleming Lawyers) for Equustek Solutions Inc.
Companies: Google Inc.; Equustek Solutions Inc.
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