In the e-commerce era, is there such a thing as a “Worldwide” Injunction?

July 6th, 2017

Well, sort of...

PASCAL LAUZON, Partner, Lawyer and Trademark Agent | Montréal

Traditionally, commercial activity was more of a local nature: you would go to a specific building, open the door, walk in, look around, see something you like, buy it and walk back out. If the vendor was selling illegal goods (e.g. counterfeit goods), the owner of the counterfeited brand could easily go to the local courthouse, obtain an order, serve it, case closed. But what if the vendor is literally everywhere by selling online? Since a court order is usually territorial (i.e. it can only be enforced in the jurisdiction where it was issued), would one require an order in every jurisdiction (or at least the most important ones) to preserve one’s rights? Worse, what if the vendor is nowhere and simply cannot be found for service of legal proceedings? Or what if the vendor ignores a court order and continues to sell counterfeit goods over the Internet nonetheless? Situations like these are unfortunately too common and increasingly frustrating for brand and copyright owners whose rights are being flagrantly violated too easily.

In Equustek Solutions Inc. v. Jack, 2014 BCSC 1063 (affd. 2015 BCCA 265), the plaintiffs had sued the defendants in the Supreme Court of British Columbia for trademark infringement and unlawful appropriation of trade secrets, and they obtained injunctions prohibiting the defendants from carrying on their business. The defendants repeatedly ignored the court order and continued to carry on business, but did so in a clandestine manner using a variety of websites, and relying on web search engines, notably Google, to direct customers to those sites. The plaintiffs therefore applied to the court for an injunction prohibiting Google, which operates the world’s most popular search engine, from delivering search results pointing to the defendants’ websites, not only in British Columbia, but worldwide. In what may seem at first like a surprising decision, the injunction was granted by the Supreme Court, appealed by Google and upheld.

This case notably raised two interesting jurisdictional issues: (1) Did the BC Supreme Court have jurisdiction over Google, which did not have any employees in the Province and was not registered there, and (2) Could the court grant a “worldwide” injunction, which, at first glance, appears to overstep the territorial jurisdiction of a court of justice?

The first question was easily resolved on the basis that even though Google did not have any physical presence in the province, it did have business activities in the province by way of offering its web search services and selling advertising, notably AdWords, which had been purchased by the defendants infringing the plaintiffs’ rights. Google was in some manner, albeit passively and unknowingly, aiding the defendants in pursuing their illegal activities.

The second question raised a series of secondary issues, which were all decided in the plaintiffs’ favour, taking the general approach that the court has the inherent jurisdiction to maintain the rule of law and to control its own process (remember that the injunction against the defendants was consistently flaunted by the defendants) and also by taking a modern approach to adapt to the reality that e-commerce has the potential for abuse by those who would take the property of others and sell it through the borderless electronic web of the Internet.

Google notably pled that an injunction ordering it not to deliver search results pointing to the defendants’ websites everywhere in the world (and not only those requested on Google’s Canadian site) would be much too broad and constitute an unprecedented “worldwide” injunction. The court made the distinction that the effects of the injunction may be worldwide but that the injunction per se compelled Google to take steps only where its search engine is controlled.

The injunction against Google was upheld unanimously by the Court of Appeal. Google then took the case to the Supreme Court of Canada, where the worldwide injunction was once again confirmed (Google Inc. v. Equustek Solutions Inc., 2017 SCC 34).

The Supreme Court confirmed that an injunction could be granted against a third party when the third party is contributing to the perpetration of illegal activities. The Court also mentioned that, in some cases like the one in instance, the injunction should be worldwide in order to be an efficient remedy. Moreover, unless proven otherwise, such an injunction violates neither the principle of comity between nations nor freedom of speech. In short, the Supreme Court, in this decision, confirms the wide discretion given to the courts in finding remedies to protect the rights of a party. This discretionary power should therefore not easily be restrained.

The two dissenting judges did not challenge the principle established by the decision of the majority. However, in their view, the principle should not have applied to the present case.

Following this decision of the highest Court of the country, it is now reasonable to presume that Canadian courts will become more and more open to non-traditional and imaginative solutions to better ensure that the rights of those seeking justice will be respected, even on the “lawless” internet. One must however bear in mind that each case will be decided on its own merits.

Is your business affected by counterfeiting, unfair competition or fraud over the Internet? You need not accept this complacently as being a normal business risk; it is not, and innovative solutions can hopefully be considered. Our experts in the BCF Internet Group can help you defend your intellectual property rights in your e-commerce business.

PASCAL LAUZON is a member of BCF’s Internet strategic team, and startup team, which offers our clients strategic advice regarding their online presence. This is a continually evolving environment which calls for the expertise of a multidisciplinary team like that of BCF. He would like to thank Sarah Hébert-Tremblay for his contribution to this article