COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Equustek Solutions Inc. v. Google Inc.,

2015 BCCA 265

Date: 20150611

Docket: CA41923

Between:

Equustek Solutions Inc., Robert Angus and Clarma Enterprises Inc.

Respondents

(Plaintiffs)

And

Morgan Jack, Datalink Technologies Gateways Inc. and Datalink Technologies Gateways LLC

Respondents

(Defendants)

And

Google Inc.

Appellant

(Respondent)

And

Canadian Civil Liberties Association, Electronic Frontier Foundation,

International Federation of Film Producers Associations and International Federation of the Phonographic Industry

Intervenors

Before:

The Honourable Mr. Justice Frankel

The Honourable Mr. Justice Groberman

The Honourable Mr. Justice Harris

On appeal from: An order of the Supreme Court of British Columbia, dated June 13, 2014 (Equustek Solutions Inc. v. Jack, 2014 BCSC 1063, Vancouver Docket S112421)

Counsel for the Appellant:

S.R. Schachter, Q.C.

G.B. Gomery, Q.C.

J.D. Bunting 2015 BCCA 265 (CanLII)

Equustek Solutions Inc. v. Google Inc. Page 2

Counsel for the Respondent Plaintiffs:

R.S. Fleming

J. Zeljkovich

Counsel for the Intervenor Canadian Civil Liberties Association:

J.C. McArthur

T.A. Posyniak

Counsel for the Intervenor Electronic Frontier Foundation:

D.K. Wotherspoon

D.A. Byma

Counsel for the Intervenors International Federation of Film Producers Assoc. and International Federation of the Phonographic Industry:

B.B. Sookman

M.L. Lam

No one appearing for the Defendants

Place and Date of Hearing:

Vancouver, British Columbia

October 27 and 28, 2014

Additional Submissions Received:

December 4, 22, and 23, 2014

Place and Date of Judgment:

Vancouver, British Columbia

June 11, 2015

Written Reasons by:

The Honourable Mr. Justice Groberman

Concurred in by:

The Honourable Mr. Justice Frankel

The Honourable Mr. Justice Harris

2015 BCCA 265 (CanLII)

Equustek Solutions Inc. v. Google Inc. Page 3

Summary:

The plaintiffs alleged that the defendants designed and sold counterfeit versions of their product. They sued for trademark infringement and unlawful appropriation of trade secrets, and obtained injunctions prohibiting the defendants from carrying on their business. The defendants continued to carry on business, but did so in a clandestine manner using a variety of websites, and relying on web search engines to direct customers to those sites. The plaintiffs successfully 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. Google appealed, arguing that the injunction was beyond the jurisdiction of the court, that it improperly operated against an innocent non-party to the litigation and that it had an impermissible extraterritorial reach. Held: Appeal dismissed. Under the Court Jurisdiction and Proceedings Transfer Act, territorial competence over the action between the plaintiffs and defendants was sufficient to establish territorial competence over the injunction application. Google does not have resident employees, business offices, or servers in the Province, but its activities in gathering data through web crawling software, in distributing targeted advertising to users in British Columbia, and in selling advertising to British Columbia businesses are sufficient to uphold the chambers judge's finding that it does business in the Province. The court, therefore, had in personam jurisdiction over Google. In the circumstances, it was permissible to seek relief against Google, even though it was not a party to the litigation. The injunction did not violate principles of comity.

Reasons for Judgment of the Honourable Mr. Justice Groberman:

[1] This is an appeal by Google Inc. ("Google") from an interlocutory injunction that prohibits it from including specific websites in results delivered by its search engines.

[2] Google is not a party to the underlying litigation, nor is it alleged to have acted unlawfully or in contravention of existing court orders. The injunction granted against it is ancillary relief designed to ensure that orders already granted against the defendants are effective.

[3] Google contends that the injunction ought not to have been granted because the application did not have a sufficient connection to the Province to give the Supreme Court of British Columbia competence to deal with the matter. It also argues that the injunction represents an inappropriate burden on an innocent non-party to the litigation. Further, it contends that the extraterritorial reach of the 2015 BCCA 265 (CanLII)

Equustek Solutions Inc. v. Google Inc. Page 4

injunction is inappropriate and a violation of principles of comity. Finally, Google contends that the injunction should not have been granted because of its effect on freedom of speech.

[4] In addition to the submissions of the parties on these matters, the Court was assisted by submissions from intervenors. Of particular note were submissions by the Canadian Civil Liberties Association, which dealt with international aspects of freedom of speech.

[5] For reasons that follow, I am of the view that the order that was granted was one that was within the competence (i.e., jurisdiction) of the Supreme Court of British Columbia. The order did not violate any principles applicable to the granting of injunctions, nor did it violate norms of freedom of speech. The judge had evidence before her from which she was entitled to find the test for an injunction to have been made out. In the result, I would dismiss the appeal.

Preliminary Issues

Scope of the FIAPF/IFPI Intervention

[6] Two preliminary issues arise on this appeal. The first is the scope of the joint intervention of the International Federation of Film Producers Associations ("FIAPF") and the International Federation of the Phonographic Industry ("IFPI"). Google takes the position that the factum filed by those intervenors goes beyond the issues on which they were granted leave to intervene. While Google has addressed all of the issues raised in the FIAPF/IFPI factum, it seeks an order that it be granted special costs against them in respect of the intervention.

[7] On September 23, 2014, I heard applications for intervenor status in this matter, and granted the FIAPF and the IFPI the right to intervene jointly and to file a ten-page factum. In my reasons (indexed as 2014 BCCA 448), I made it clear that the intervenors' role would be a limited one: 2015 BCCA 265 (CanLII)

Equustek Solutions Inc. v. Google Inc. Page 5

[28] [I]t is important that intervenor status not be granted simply to have intervenors reiterate or support the arguments of the parties. The [FIAPF] and IFPI say, in their materials that:

The scope of a British Columbia court's order requiring non-party search engines to disable access to online illegal content and materials should be informed by reference to relevant legal developments in other jurisdictions. International legal developments can provide useful guidance on appropriate principles to govern the manner in which the court issues such orders, and may assist British Columbia courts to act in harmony with developing international jurisprudence. FIAPF and IFPI intend to bring to the Court's attention relevant jurisprudence from other jurisdictions which has a bearing on the issues on appeal not previously provided to the Court by either of the parties ....

[29] I am persuaded that such information, and submissions based on it, will be of assistance to the Court in this matter, and I grant the [FIAPF] and IFPI intervenor status limited to that area.

[8] The factum filed by the FIAPF/IFPI deals with the experience of courts of other countries in cases involving Internet abuses. It also discusses the role that equitable relief has been given in common law jurisdictions in cases dealing with the use of Internet resources in the violation of intellectual property rights.

[9] When the FIAPF/IFPI factum was filed, Google advised them of its view that the arguments presented went beyond the bounds of the intervention order. The intervenors filed a slightly revised factum with a view to meeting Google's concerns. Google contends that the arguments presented in the factum still extend beyond the scope of the intervention order.

[10] Google's concerns are, to some extent, understandable. The focus of the intervention was to be on international jurisprudence. A portion of the factum, however, deals with equitable principles, which might be thought to form part of domestic law.

[11] I am not, however, persuaded that the amended factum is objectionable. It deals with case law of non-Canadian jurisdictions. Where it refers to cases decided in common law jurisdictions, it does so in the context of developing areas of the law, and in particular, in the context of areas of law in which Canadian law will not necessarily develop in lock-step with the law of other common law jurisdictions. The 2015 BCCA 265 (CanLII)

Equustek Solutions Inc. v. Google Inc. Page 6

discussion of legal developments in other common law jurisdictions falls within the scope of the intervention order. I would add that the intervention has been of great assistance to the Court. I would, accordingly, not give effect to Google's objection.

Fresh Evidence

[12] The other preliminary issue to be dealt with is an application by the respondent to adduce fresh evidence. The fresh evidence consists of two affidavits. The first summarizes and exhibits recently disclosed documents that suggest that the defendants, early on in this litigation, were making efforts to ensure that their websites were listed in favourable positions in Google search results. The second affidavit is an expert opinion with respect to the new documents.

[13] The affidavits deal with a subject that is very much tangential to the issues on this appeal, and they do not provide any definitive new evidence that is likely to assist the Court. I am not persuaded that the fresh evidence ought to be admitted, and I would dismiss the application to adduce it.

Factual Background

[14] I turn, then, to the issues on the appeal.

[15] The plaintiffs design, manufacture and sell industrial network interface hardware. Their products allow different pieces of complex industrial equipment to communicate with one another.

[16] At one time, the defendants were distributors of the plaintiffs' product. The plaintiffs allege that the defendants began to re-label the product and pass it off as their own. Later, the defendants are said to have unlawfully acquired confidential information and trade secrets belonging to the plaintiffs and used the information to design and manufacture a competing product, the "GW1000". The defendants continued to advertise the plaintiffs' product for sale, but filled orders with their own competing product. The plaintiffs say that the defendants continue to sell the GW1000, and in doing so violate the plaintiffs' trade secrets and trademarks. 2015 BCCA 265 (CanLII)

Equustek Solutions Inc. v. Google Inc. Page 7

[17] In 2011, when the plaintiffs commenced their lawsuit against the defendants, the defendants' operations were based in Vancouver. A number of interlocutory orders were made early in the litigation, including orders that the defendants cease referencing the plaintiffs' products on their websites, that they publish a notice on their websites redirecting the plaintiffs' customers to the plaintiffs, and that they disclose customers' names to the plaintiffs. The defendants did not comply with the orders. Within a year of the lawsuit having been commenced, the defendants ceased to respond to communications in the litigation. In June 2012, the statement of defence of the first two defendants was struck, and in March 2013, the statement of defence of the third defendant was also struck.

[18] The defendants have changed their business operations since the lawsuit was commenced. They no longer operate from Vancouver. They offer their product for sale through a number of websites that they appear to control. They fill orders from unknown locations, apparently outside Canada. Although we are advised that the plaintiffs have made some efforts to determine where the defendants manufacture and warehouse their product, and to determine where the product is shipped from, they have not been successful. It appears that the locations have changed from time to time. The chambers judge described them as a "virtual company". As the product that they sell is a physical one which must be delivered to customers, it may be more accurate to describe their operations as "clandestine" than as "virtual".

[19] Web-based businesses, such as that now operated by the defendants, must have some method for directing potential customers to their websites. The defendants rely on web search engines to perform this function. Google operates the leading search engine worldwide; the chambers judge found that between 70 and 75% of all searches are conducted through Google. Sites operated by Microsoft ("Bing") and Yahoo account for most of the non-Google searches, though there are also smaller players in the search engine business. There is considerable force to the assertion made in the plaintiffs' factum: 2015 BCCA 265 (CanLII)

Equustek Solutions Inc. v. Google Inc. Page 8

Google is the dominant player in the search engine market, and no business conducted on the internet can succeed unless [it] can be easily found by a search on Google.

[20] Google is incorporated in Delaware and headquartered in California. It says that it does not have a physical presence in British Columbia, by which it means that it does not have offices or resident staff here, and that none of its servers are located in the Province.

[21] Google operates its search engine services through many different websites. Internet users with Canadian IP addresses - a group comprising almost all users accessing the Internet from within Canada - are, by default, redirected from "google.com" to "google.ca" when they perform searches. Users can, however, override this redirection behaviour to access the American site. Canadian users can also access dozens (perhaps hundreds) of Google websites directed at other countries by using the URLs for those sites (e.g., "google.co.in" for India; "google.es" for Spain; "google.fr" for France; and "google.com.tr" for Turkey).

[22] Google does not charge users to use its search engines. It earns money by displaying advertising along with its search results. Advertising is targeted. The specific ads that are displayed depend on the user's location, the search terms that the user enters, and the user's Internet search history. Google's advertising customers include businesses in British Columbia. The advertising contracts are governed by the laws of California.

[23] Google delivers search results according to proprietary algorithms. It indexes much of the World Wide Web. Web pages may be excluded from Google's search results for a variety of reasons, however. Google employs approximately 40 people to remove webpages it considers offensive from its indexing and result displays. As a matter of policy, however, it does not voluntarily block entire domains, subdomains, or websites from its services - instead, it excludes only specific webpages. 2015 BCCA 265 (CanLII)

Equustek Solutions Inc. v. Google Inc. Page 9

[24] In 2012, the plaintiffs sought an injunction against Google to force it to remove a number of websites used by the defendants from its search indexes. Google voluntarily removed some 345 URLs from search results on google.ca, but it was not willing to go further. In early 2013, the plaintiffs indicated that they were not satisfied with the arrangement, and the matter returned to court.

[25] The main problem initially identified by the plaintiff with the voluntary arrangement was that the defendants simply moved objectionable content to new pages within their websites to get around the voluntary de-indexing of specific pages. The plaintiffs described the effect as being like a game of "Whack-A-Mole", in which the defendants were nimble enough to circumvent Google's voluntary arrangement. Later, the plaintiffs became aware that the voluntary arrangement applied only to searches conducted on google.ca, and they also identified that as a problem. It is clear that the majority of sales of GW1000 devices are to purchasers in countries other than Canada. An arrangement limited to google.ca, therefore, is of limited value to the plaintiffs.

[26] The plaintiffs pressed their application to a hearing. After a lengthy hearing and further written submissions, the chambers judge granted an order, the operative part of which is as follows:

Within 14 days of the date of this judgment, Google Inc. is to cease indexing or referencing in search results on its internet search engines the websites listed in Schedule A, including all of the subpages and subdirectories of the listed websites, until the conclusion of the trial of this action or further order of this court.

[27] Similar orders were made in respect of two other lists of websites, and the contents of Schedule A have been modified by subsequent orders. According to the plaintiffs, the injunction has been effective in decreasing the number of the defendants' websites that show up in search results, and (as importantly) the ranking of those sites within the search results. While the defendants are, to some extent, able to circumvent the order by setting up websites under domain names that are not included in the order, the pace of such activity is necessarily much slower than simply moving web content to a new page within an existing domain. 2015 BCCA 265 (CanLII)

Equustek Solutions Inc. v. Google Inc. Page 10

[28] Shortly after the injunction was granted, Google applied to this Court for leave to appeal and for a partial stay of the order. In reasons indexed as 2014 BCCA 295, leave to appeal was granted, but the application for a stay was dismissed.

Territorial Competence of the Court under the CJPTA

[29] The first issue on this appeal is the "territorial competence" of the Supreme Court of British Columbia over the injunction application. Pursuant to s. 2(2) of the Court Jurisdiction and Proceedings Transfer Act, S.B.C. 2003, c. 28 (the "CJPTA"), "[t]he territorial competence of a British Columbia court is determined solely by reference to [Part 2 of that statute]". The parties are agreed that the territorial competence of the Supreme Court to issue an injunction in this case depends on an assessment to be made under s. 3(e):

3. A court has territorial competence in a proceeding that is brought against a person only if

(e) there is a real and substantial connection between British Columbia and the facts on which the proceeding against that person is based.

...

[30] The first difficulty in interpreting s. 3(e) lies in the use of the word "proceeding". Google argues that the "proceeding" at issue is the injunction application itself, and says the court must determine whether that application has a real and substantial connection to British Columbia. The plaintiffs, on the other hand, argue that the "proceeding" is the action that they have brought against the defendants. They say that because the Supreme Court undoubtedly has territorial competence over that action, it also has territorial competence over ancillary applications arising out of the action.

[31] The terms "procedure" and "proceeding" are defined in s. 1 of the CJPTA:

"procedure" means a procedural step in a proceeding;

"proceeding" means an action, suit, cause, matter, petition proceeding or requisition proceeding and includes a procedure and a preliminary motion; 2015 BCCA 265 (CanLII)

Equustek Solutions Inc. v. Google Inc. Page 11

[32] The chambers judge, relying on these definitions, held that the relevant "proceeding" was the application for the injunction:

[24] [P]roceeding is defined broadly in s. 1 of the CJPTA as "an action, suit, cause, matter, petition proceeding or requisition proceeding and includes a procedure and a preliminary motion". Thus, the "proceeding" with respect to which I must answer the question of jurisdiction is not the underlying dispute between the plaintiffs and defendants but the relief that is specifically sought against Google.

[33] I am not convinced that the definitions lead inexorably to that conclusion. Two different interpretations of the definition of "proceeding" are possible. The judge appears to have interpreted as if it read:

"proceeding" means an action, suit, cause, matter, petition proceeding, requisition proceeding, procedure or preliminary motion.

[34] In accordance with that reading of the definition, she reasoned that the injunction application was a separate "proceeding" for the purposes of the CJPTA and that territorial competence had to be determined by looking solely to the injunction application.

[35] The definition of "proceeding", can however, be read as having the following meaning:

"proceeding" means an action, suit, cause, matter, petition proceeding or requisition proceeding, and such a proceeding includes any procedure or preliminary motion brought within it;

[36] While the two interpretations of the definition are both consistent with its strict wording, I am of the view that the language of the section favours the latter interpretation, since it explains and gives meaning to the words "and includes".

[37] Further, requiring a court to determine territorial competence separately for each "procedure" within an action would lead to undesirable consequences and make the scheme of the statute unworkable. For example, where an out-of-province plaintiff was injured in a motor vehicle accident, the court might find itself to have territorial competence over the action, but unable to order disclosure of documents dealing with the long-term medical care of the plaintiff outside the Province, since 2015 BCCA 265 (CanLII)

Equustek Solutions Inc. v. Google Inc. Page 12

the application for disclosure would be treated for the purposes of the CJPTA as a separate "proceeding". Slicing an action into individual procedures for the purpose of determining territorial competence would lead to litigation being unwieldy and impractical. Such consequences could not have been intended.

[38] In arguing that territorial competence over an action does not carry with it territorial competence over an injunction application against a non-party, Google refers to the 1994 commentaries accompanying the Uniform Law Conference of Canada model Court Jurisdiction and Proceedings Transfer Act, the model for the British Columbia statute. Commentary 10.3 states:

If a plaintiff wishes to bring proceedings against two defendants, one of whom is ordinarily resident in the enacting jurisdiction and the other of whom is not, territorial competence over the first defendant will be present under paragraph 3(d). Territorial competence over the second defendant will not be presumed merely on the ground that that person is a necessary or proper party to the proceeding against the first person. The proceeding against the second person will have to meet the real and substantial connection test in paragraph 3(e).

[39] This commentary is of limited assistance to Google. The commentary does not deal with the question of whether territorial competence over an action carries with it territorial competence over procedures within the action. Rather, it addresses the question of whether territorial competence over an action against one defendant carries with it territorial competence over an action against another defendant. The language of s. 3(e) clearly articulates the necessity, in a proceeding against a person, to demonstrate a real and substantial connection between British Columbia and the facts on which the proceeding against that person is based.

[40] Unlike an action against a defendant, I am of the view that the injunction application against Google is not, for the purposes of the CJPTA, its own "proceeding". Because the underlying action is within the territorial competence of the Supreme Court, that court also has territorial competence over the injunction application.

[41] There is, in any event, a real and substantial connection between British Columbia and the facts on which the injunction application against Google was

2015 BCCA 265 (CanLII)

Equustek Solutions Inc. v. Google Inc. Page 13

based. The most important facts on which the injunction application is based - facts concerning the violation of trade secrets and of intellectual property rights - have a strong connection to the Province. Therefore, even if the CJPTA were to be interpreted as treating the injunction application as an independent proceeding, the requirements of s. 3(e) would be satisfied.

[42] I would, therefore, find that the judge made no error in concluding that the Supreme Court of British Columbia had territorial competence over the injunction application.

[43] In saying this, I note that the chambers judge's analysis differed from the one I have presented. She concentrated on the relationship of Google to the Province, and analysed the relationship under s. 10 of the CJPTA. She considered three subsections of s. 10 of the statute:

10. Without limiting the right of the plaintiff to prove other circumstances that constitute a real and substantial connection between British Columbia and the facts on which a proceeding is based, a real and substantial connection between British Columbia and those facts is presumed to exist if the proceeding

(a) is brought to enforce, assert, declare or determine proprietary or possessory rights or a security interest in property in British Columbia that is immovable or movable property,

...

(h) concerns a business carried on in British Columbia,

(i) is a claim for an injunction ordering a party to do or refrain from doing anything

(i) in British Columbia, or

(ii) in relation to property in British Columbia that is immovable or movable property,

[44] The judge found that ss. 10(a) and (h) were applicable, but rejected the proposition that s. 10(i) applied. She held that the presumption in favour of a "real and substantial connection" had not been rebutted, and that the court was competent to entertain the application for an injunction. 2015 BCCA 265 (CanLII)

Equustek Solutions Inc. v. Google Inc. Page 14

[45] While I am not convinced that there was any need to resort to s. 10 to find that the Supreme Court had territorial competence over the application, the judge's findings are relevant to another issue on this appeal - that of whether the Supreme Court has in personam jurisdiction over Google. I will, therefore, return to her analysis in discussing that issue.

Constitutional Limitations on Jurisdiction and Competence

[46] Google argues that, in determining the competence of the Supreme Court of British Columbia in this matter, we must consider matters that go beyond "territorial competence" under the CJPTA. We must, it says, be cognizant of the constitutional aspects of the real and substantial connection test, as reflected in Club Resorts Ltd. v. Van Breda, 2012 SCC 17:

[31] [W]e should remain mindful of the distinction between the real and substantial connection test as a constitutional principle and the same test as the organizing principle of the law of conflicts. With respect to the constitutional principle, the territorial limits on provincial legislative competence and on the authority of the courts of the provinces derive from the text of s. 92 of the Constitution Act, 1867. These limits are, in essence, concerned with the legitimate exercise of state power, be it legislative or adjudicative. The legitimate exercise of power rests, inter alia, upon the existence of an appropriate relationship or connection between the state and the persons who are brought under its authority. The purpose of constitutionally imposed territorial limits is to ensure the existence of the relationship or connection needed to confer legitimacy.

[32] As can be observed from the jurisprudence, in Canadian constitutional law, the real and substantial connection test has given expression to the constitutionally imposed territorial limits that underlie the requirement of legitimacy in the exercise of the state's power of adjudication. This test suggests that the connection between a state and a dispute cannot be weak or hypothetical. A weak or hypothetical connection would cast doubt upon the legitimacy of the exercise of state power over the persons affected by the dispute.

[33] The constitutionally imposed territorial limits on adjudicative jurisdiction are related to, but distinct from, the real and substantial connection test as expressed in conflicts rules. Conflicts rules include the rules that have been chosen for deciding when jurisdiction can be assumed over a given dispute, what law will govern a dispute or how an adjudicative decision from another jurisdiction will be recognized and enforced. The constitutional territorial limits, on the other hand, are concerned with setting the outer boundaries within which a variety of appropriate conflicts rules can be elaborated and applied. The purpose of the constitutional principle is to 2015 BCCA 265 (CanLII)

Equustek Solutions Inc. v. Google Inc. Page 15

ensure that specific conflicts rules remain within these boundaries and, as a result, that they authorize the assumption of jurisdiction only in circumstances representing a legitimate exercise of the state's power of adjudication.

[34] This case concerns the elaboration of the "real and substantial connection" test as an appropriate common law conflicts rule for the assumption of jurisdiction. I leave further elaboration of the content of the constitutional test for adjudicative jurisdiction for a case in which a conflicts rule is challenged on the basis of inconsistency with constitutionally imposed territorial limits.

[47] The plaintiffs contend that this analysis is obiter, and that it should be rejected as not having been "carefully considered". They point out, correctly, that provincial superior courts do not derive their jurisdiction from s. 92 of the Constitution Act, 1867, and that the jurisdictional limitations that they have are not the same as those that apply to Provincial legislatures. In this regard, they cite from the decision of the Supreme Court of Canada in Canada (Human Rights Commission) v. Canadian Liberty Net, [1998] 1 S.C.R. 626 at para. 26:

... The notion of inherent jurisdiction has developed from the role of provincial superior courts in Canada's legal system. The unique historical feature of provincial superior courts, as opposed to the Federal Court, is that they have traditionally exercised general jurisdiction over all matters of a civil or criminal nature. This general jurisdictional function in the Canadian justice system precedes Confederation, and was expressly continued by s. 129 of the Constitution Act, 1867, "as if the Union had not been made". Under s. 92(14), the provinces exercise authority over the "Administration of Justice in the Province", including the "Constitution, Maintenance, and Organization" of provincial superior courts. The unique institutional feature of these courts is that by s. 96 of the Constitution Act, 1867, judges of provincial superior courts are appointed by the Governor General, not by the provinces. Responsibility for s. 96 courts is thus shared between the two levels of government, unlike either inferior provincial courts, or courts created under s. 101. Estey J., in Attorney General of Canada v. Law Society of British Columbia, [1982] 2 S.C.R. 307, at pp. 326-27, explained the unique nature of provincial superior courts in the following way:

The provincial superior courts have always occupied a position of prime importance in the constitutional pattern of this country. They are the descendants of the Royal Courts of Justice as courts of general jurisdiction. They cross the dividing line, as it were, in the federal-provincial scheme of division of jurisdiction, being organized by the provinces under s. 92(14) of the [Constitution Act, 1867] and are presided over by judges appointed and paid by the federal government (sections 96 and 100 of the [Constitution Act, 1867]). 2015 BCCA 265 (CanLII)

Equustek Solutions Inc. v. Google Inc. Page 16

[48] While it is clear jurisdiction or competence of a provincial superior court does not derive from s. 92 of the Constitution Act, 1867, I do not accept that the quoted passage from Van Breda should be dismissed as ill-considered obiter. While the details of constitutional limitations on court jurisdiction were not fully developed in Van Breda, there can be no doubt that such limits do exist. Further, when a statute such as the CJPTA is enacted by a provincial legislature, the statute itself must fall within provincial competence under s. 92 of the Constitution Act, 1867 (presumably under s. 92(14) which establishes Provincial jurisdiction over "The Administration of Justice in the Province").

[49] In Van Breda, the Supreme Court of Canada affirmed that the "real and substantial connection test" has both conflict of laws aspects and constitutional aspects. It pointed out that the test may be differently defined as a conflict of laws principle (where issues of practicality and of comity play important roles) and as a constitutional principle. A full elaboration of the differences was not necessary in Van Breda.

[50] While Google raises the issue of constitutional limitations on court jurisdiction, it has not articulated a comprehensive theory of such limitations. The plaintiffs, have, similarly, not attempted to do so. Rather, both sides have referred to a number of cases that they contend establish the contours of the extra-territorial remedial powers of the courts. In the circumstances, I do not propose to specifically address the constitutional aspects of the "real and substantial connection" test. I accept (as have the parties) that the jurisprudence is illustrative of the boundaries, and that the underlying principles that can be drawn from the cases should determine the result in this case.

In Personam Jurisdiction over Google

[51] As I have indicated, the subject matter of the underlying litigation clearly has a "real and substantial connection" to British Columbia. Equally, Google's services, which provide a link between the defendant's products and potential customers, are substantially connected to the substance of the lawsuit. There remains, however, a 2015 BCCA 265 (CanLII)

Equustek Solutions Inc. v. Google Inc. Page 17

question of whether Google itself is substantially connected with British Columbia in a manner sufficient to allow the courts of this Province to assume in personam jurisdiction over it.

[52] As a result of the chambers judge's approach to territorial competence under the CJPTA, her analysis of the connection of Google to British Columbia is largely tied to provisions of s. 10 of that statute. The considerations that she took into account, however, are equally important to an analysis of whether Google's connections to the Province are sufficient to give the Supreme Court in personam jurisdiction over it. The judge analyzed the question of whether Google does business in the Province in considerable detail. I quote at length from that analysis, with which I am in agreement:

[34] Google says that the fact that an internet search is initiated in British Columbia does not equate to Google carrying on business in the province. Google argues that on the plaintiffs' reasoning there is not a country on earth whose civil courts could not assert jurisdiction over Google in respect of search results. Rather, suggests Google, "some form of actual not virtual presence is required". Google relies heavily on Van Breda in which LeBel J. wrote at para. 87:

[87] Carrying on business in the jurisdiction may also be considered an appropriate connecting factor. But considering it to be one may raise more difficult issues. Resolving those issues may require some caution in order to avoid creating what would amount to forms of universal jurisdiction in respect of tort claims arising out of certain categories of business or commercial activity. Active advertising in the jurisdiction or, for example, the fact that a Web site can be accessed from the jurisdiction would not suffice to establish that the defendant is carrying on business there. The notion of carrying on business requires some form of actual, not only virtual, presence in the jurisdiction, such as maintaining an office there or regularly visiting the territory of the particular jurisdiction. [Emphasis added.]

Google did not quote that paragraph in full. The next line adds what is, in my view, an important qualification:

But the Court has not been asked in this appeal to decide whether and, if so, when e-trade in the jurisdiction would amount to a presence in the jurisdiction.

In contrast to Van Breda, the matter before me involves e-commerce, or at least providing an "e-service".

[35] Van Breda indicates that a real and substantial connection cannot be derived from the mere fact that a passive website can be accessed in the 2015 BCCA 265 (CanLII)

Equustek Solutions Inc. v. Google Inc. Page 18

jurisdiction. To similar effect is Thumbnail Creative Group Inc. v. Blu Concept Inc., 2009 BCSC 1833 [Thumbnail]. In that case the plaintiff claimed the defendant breached copyright by publishing the plaintiff's images. The defendant published these images in a book in the United States which could be purchased on the internet. Madam Justice Dickson said at para 19:

[19] ... use of the Internet in the course of conducting business does not mean the business in question is carried on globally for the purposes of a territorial competence analysis. As counsel for [the defendants] points out, if this were so the Supreme Court of British Columbia would have jurisdiction in any dispute involving any business that makes long-distance telephone calls into this province or relies upon the Internet. [The plaintiff] did not provide authority in support of this far reaching proposition, which is, in my view, unsustainable. [Emphasis added.]

[36] It follows form Van Breda and Thumbnail that the ability of someone in British Columbia to open a website created by a person in another country does not of itself give this Court jurisdiction over the creator of that website. Something more is required. In Van Breda, the Court considered factors such as whether the defendants' representatives regularly travelled to Ontario to further the defendants' promotional activities for its resorts and whether it distributed promotional materials in the province. In Thumbnail, Dickson J. considered that the connection between the defendants and British Columbia appeared to be limited to the sale of one copy of the defendant's book.

[37] E-commerce has exponentially increased the difficulty of determining whether a company is carrying on business in a particular jurisdiction; it raises the spectre of a company being found to carry on business all over the world, just as Google submits with some alarm. Kevin Meehan comments in "The Continuing Conundrum of International Internet Jurisdiction" (2008) 31 BC Int'l & Comp L Rev 345 at 349:

In the traditional analog world, it is relatively easy for courts to determine the geographical locations of the persons, objects, and activities relevant to a particular case. The geography of the digital world of the Internet, however, is not as easily charted. Content providers may physically reside, conduct their business, and locate their servers in a particular location, yet their content is readily accessible from anywhere in the world. Furthermore, attempts to identify the location of a particular user over the Internet have proven extremely difficult, and many Internet users compound this problem by intentionally hiding their location. Traditional principles of international jurisdiction, particularly territoriality, are poorly suited for this sort of environment of geographic anonymity. Courts have struggled to develop a satisfactory solution, yet no progress has been made toward a uniform global standard of Internet jurisdiction.

[38] In short, courts have traditionally focused on locating the behaviour in issue within a particular state's borders to ensure that "the connection between a state and a dispute cannot be weak or hypothetical [so as to] cast doubt upon the legitimacy of the exercise of state power over the persons 2015 BCCA 265 (CanLII)

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affected by the dispute" [Van Breda at para. 32]. Online activities, whether commercial or otherwise, are not so easily pigeonholed.

...

[47] Google submits that it merely offers a passive website to residents of British Columbia who wish to search the internet. It argues that its programs automatically generate search results without Google being actively involved in the particular search. Paragraph 23 of Google's written submissions state:

[23] ... Google's internet search engine allows users to enter key-words and then Google generates a list of results in a specific ranked order. Google's search results are computer generated through the use of Google's highly confidential and proprietary algorithm and methodology. Google's web crawler program (referred to as "Googlebot") reviews the content that is available on trillions of webpages or URLs over the internet. Search results are generated based on that content [within seconds]. [48] I conclude that Google's internet search websites are not passive information sites. As a user begins to type a few letters or a word of their query, Google anticipates the request and offers a menu of suggested potential search queries. Those offerings are based on that particular user's previous searches as well as the phrases or keywords most commonly queried by all users. As James Grimmelman writes in "The Structure of Search Engine Law" (2007-2008) 93 Iowa L Rev 1 at 10-11:

Search engines are also increasingly learning from the large volumes of query data they have accumulated. A user's history of queries can provide useful information about her probable intentions -- for example, whether she tends towards navigational or transactional queries. Similarly, search engines gain useful feedback into their own successes and failures by seeing which results users click on or by noticing long strings of searches on related terms, which may indicate that the user is having trouble finding what she's looking for.

[49] Google collects a wide range of information as a user searches, including the user's IP address, location, search terms, and whether the user acts on the search results offered by "clicking through" to the websites on the list.

[50] In addition to its search services, Google sells advertising to British Columbia clients. Indeed, Google entered into an advertising contract with the defendants and advertised their products up to the hearing of this application. Google acknowledges it should not advertise for the defendants and filed an affidavit explaining its inadvertent failure to suspend the defendants' Google account prior to the hearing.

[51] Although Google's advertising business is marketed in Canada by Google Canada, British Columbia residents who wish to advertise on Google's webpages contract directly with Google and make payments directly to Google. Although those contracts stipulate that disputes will be governed by California law and adjudicated in California courts, the "choice of laws" provision in those contracts does not alter the fact that Google is carrying on 2015 BCCA 265 (CanLII)

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a business in this province through advertising contracts with British Columbia residents.

[52] The Supreme Court of Canada noted that advertising in a jurisdiction is not by itself a sufficient connection to establish territorial competence: Van Breda at paras. 87, 114. But there is a difference between a company advertising its own services through a website or other media available to British Columbia residents, and engaging in the business of selling advertising space on the internet to other companies in British Columbia. There is uncontradicted evidence before me that Google sells advertising to British Columbia residents, including the defendants.

[53] Google submits that its advertising services are completely separate from its search services, and cannot justify the Court assuming jurisdiction over Google's search services. With respect, I do not agree with that proposition for two reasons.

[54] First, Google's business model is contextual advertising; the "context" is the search done using Google's search services. Ads are linked to either the subject matter of the search, or the history of the person searching. Google does not charge users of its search services. Rather, it sells space on its websites to advertisers whose ads are displayed alongside the search results generated by a user's query.

[55] These ads can relate to the topics searched. For example, if "Vancouver lawyers" is searched, a page showing a list of Vancouver lawyers will be generated. At the top of the list a number of ads show up for law firms that have paid Google in order to advertise there. Those ads look like the other search results but are marked by Ad. [56] These ads can also be unrelated to the content of the search, but geared to a particular searcher. For example, if the user has in the past searched a retail website, ads for that retail outlet may appear on the page showing the search results for the query "Vancouver lawyers". Google can individually tailor the advertising seen by a user each time they search using the information in the search query and that user's own search history. ...

[64] I will address here Google's submission that this analysis would give every state in the world jurisdiction over Google's search services. That may be so. But if so, it flows as a natural consequence of Google doing business on a global scale, not from a flaw in the territorial competence analysis. As Janet Walker writes in Castel & Walker: Canadian Conflict of Laws, loose-leaf, 6 ed. (Markham, Ontario: LexisNexis, 2005), ch. 11 at 27, a legal person such as a corporation can be subject to multiple jurisdictions whether because it is resident there through registration, or because it is carrying on business in that jurisdiction. Further, the territorial competence analysis would not give every state unlimited jurisdiction over Google; jurisdiction will be confined to issues closely associated with the forum in accordance with private international law. 2015 BCCA 265 (CanLII)

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[53] There was considerable evidence before the chambers judge as to the nature of Google's enterprise, and the degree to which it can be said to do business in British Columbia. Her findings of fact are, of course, entitled to deference.

[54] While Google does not have servers or offices in the Province and does not have resident staff here, I agree with the chambers judge's conclusion that key parts of Google's business are carried on here. The judge concentrated on the advertising aspects of Google's business in making her findings. In my view, it can also be said that the gathering of information through proprietary web crawler software ("Googlebot") takes place in British Columbia. This active process of obtaining data that resides in the Province or is the property of individuals in British Columbia is a key part of Google's business.

[55] Google says that even if it is concluded that it carries on business in British Columbia, the injunction was not properly granted, because it did not relate to the specific business activities that Google carries on in the Province. In my view, the business carried on in British Columbia is an integral part of Google's overall operations. Its success as a search engine depends on collecting data from websites throughout the world (including British Columbia) and providing search results (accompanied by targeted advertising) throughout the world (including British Columbia). The business conducted in British Columbia, in short, is the same business as is targeted by the injunction.

[56] Google raises the specter of it being subjected to restrictive orders from courts in all parts of the world, each concerned with its own domestic law. I agree with the chambers judge that it is the world-wide nature of Google's business and not any defect in the law that gives rise to that possibility. As well, however, the threat of multi-jurisdictional control over Google's operations is, in my opinion, overstated. Courts must, in exercising their powers, consider many factors other than territorial competence and the existence of in personam jurisdiction over the parties. Courts must exercise considerable restraint in granting remedies that have international ramifications. I turn, then, to consider the nature of that restraint. 2015 BCCA 265 (CanLII)

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Limits on the Granting of Injunctions

[57] Google contends that apart from territorial competence, as defined under the CJPTA, and the common law "real and substantial connection" test, there are other limitations on the granting of injunctions. Again, it points to the commentary of the Uniform Law Conference of Canada that accompanied the uniform model statute:

2.3. The Act defines a court's territorial competence "in a proceeding" (section 3). It does not define the territorial aspects of any particular remedy. Thus, the Act does not supersede common law rules about the territorial limits on a remedy, such as the rule that a Canadian court generally will not issue an injunction to restrain conduct outside the court's own province or territory.

2.4 The Act only defines territorial competence; it does not define subject matter competence. It is not intended to affect any rules limiting a Canadian court's jurisdiction by reference to the amount of the claim, the subject matter of a claim, or any other factor besides territorial connections.

[58] In my view, commentary 2.4 is of limited interest in this case. The subject matter at issue here - misappropriation of confidential information and violations of intellectual property rights - are clearly within the jurisdiction of a provincial superior court. Indeed, because provincial superior courts are courts of inherent jurisdiction, concerns of subject matter competence will arise in respect of them only when valid legislation serves to limit the inherent jurisdiction that would otherwise exist.

[59] On the other hand, commentary 2.3 is of significance in a case such as the present one. Particularly in respect of discretionary remedies and particularly in respect of equitable relief, courts in common law jurisdictions have imposed limits on the availability of relief.

[60] It is important to recognize that the issue is not, or at least not wholly, one of jurisdiction. Common law courts have limited their exercise of remedial powers, not simply due to concerns about jurisdiction, but also as a matter of curial self-restraint.

[61] In this case, Google argues that the authority of the Supreme Court to grant injunctive relief depends on the existence of a justiciable claim between the applicant and the respondent. It says that because the plaintiffs have not alleged 2015 BCCA 265 (CanLII)

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that Google has committed (or is about to commit) a legal wrong against them, they are not entitled to an order against Google.

[62] It is unusual for courts to grant remedies against persons who are not parties to an action. The reasons for this are obvious - most civil claims are concerned with the vindication of a right, and the remedial focus will be on that right. Further, notions of justice demand that procedural protections be afforded to a person against whom a remedy is sought. The usual method of providing such protections is to require the claimant to bring an action against the respondent, giving the respondent the rights of a party.

[63] A party claiming damages or equitable relief for a civil wrong, or a declaration of rights will normally be required to make the person against whom the claim is made a defendant in the action.

[64] This does not mean, however, that courts are powerless to make orders against non-parties. Google acknowledges discovery orders under the principles enunciated in Norwich Pharmacal Co. v. Customs and Excise Commissioners (1973), [1974] A.C. 133 (H.L.) may be made against non-parties. There are, in fact, many types of orders that are routinely made against non-parties - subpoenas to witnesses, summonses for jury duty and garnishing orders are common examples. Many of these orders have a statutory basis or are purely procedural, but others derive from the inherent powers of the court or are more substantive in nature.

[65] With respect to injunctions specifically, there is support for Google's position in cases such as Siskina (Owners of cargo lately laden on board) v. Distos Compania Naviera S.A., [1979] A.C. 210 (H.L.), and South Carolina Insurance Co. v. Assurantie Maatschappij "de Zeven Provincien" N.V. (1986), [1987] A.C. 24 (H.L.). In the latter case, Lord Brandon of Oakbrook said at 40:

The effect of [a number of authorities, including Siskina], so far as material to the present case, can be summarised by saying that the power of the High Court to grant injunctions is, subject to two exceptions ..., limited to two situations. Situation (1) is when one party to an action can show that the other party has either invaded, or threatens to invade a legal or equitable right of the former for the enforcement of which the latter is amenable to the 2015 BCCA 265 (CanLII)

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jurisdiction of the court. Situation (2) is where one party to an action has behaved, or threatens to behave, in a manner which is unconscionable.

[66] The exceptions referred to by the Court were anti-suit injunctions and freeze orders (generally referred to as Mareva injunctions). While all of the Law Lords agreed generally with Lord Brandon, Lord Goff of Chieveley (with whom Lord Mackay of Clashfern agreed), at 44, expressed reservations regarding the strict limitations on the availability of injunctions postulated Lord Brandon:

I am reluctant to accept the proposition that the power of the court to grant injunctions is restricted to certain exclusive categories. That power is unfettered by statute; and it is impossible for us now to foresee every circumstance in which it may be thought right to make the remedy available.

[67] In Channel Tunnel Group Ltd. v. Balfour Beatty Construction Ltd., [1993] A.C. 334 (H.L.), the doubt cast on Lord Brandon's dicta was even more pronounced. Lord Mustill (with whom the other Law Lords agreed) said, at 362:

I prefer not to engage the question whether the law is now firmly established in terms of Lord Brandons statement, or whether it will call for further elaboration to deal with new practical situations at present unforeseen. For present purposes it is sufficient to say that the doctrine of the Siskina, put at its highest, is that the right to an interlocutory injunction cannot exist in isolation, but is always incidental to and dependant on the enforcement of a substantive right, which usually although not invariably takes the shape of a cause of action.

[68] Lord Browne-Wilkinson added certain observations, at 343, which were endorsed by Lord Keith of Kinkel and Lord Goff of Chieveley, and so had the support of a majority of the Law Lords:

...I should make it clear that I have merely been considering the effect of the decision in the Siskina on the assumption that it correctly states the law. The tests it laid down in absolute terms have already received one substantial modification: see Castanho v. Brown & Root (U.K.) Ltd. [1981] A.C. 557; British Airways Board v. Laker Airways Ltd. [1985] A.C. 58. Moreover, in South Carolina Insurance Co. v. Assurantie Maatschappij De Zeven Provincien N.V. [1987] A.C. 24, Lord Goff of Chieveley (with whom Lord Mackay of Clashfern agreed) reserved the question whether the law as laid down by the Siskina (as subsequently modified) was correct in restricting the power to grant injunctions to certain exclusive categories. With respect, I share the same doubts as are there expressed and reserve the question for consideration when it arises. 2015 BCCA 265 (CanLII)

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[69] The scope of remedial jurisdiction and the practice of exercising that jurisdiction with restraint was recently considered in the comprehensive judgment of Arnold J. in Cartier International AG v. British Sky Broadcasting Limited, [2014] EWHC 3354 (Ch.). In that case, the plaintiffs were producers of luxury goods, for which they held well-known trademarks. They alleged that websites operating from abroad were being used to sell counterfeit merchandise that infringed their trademarks to people in England. The plaintiffs sought an injunction against a number of large English Internet service providers to require them block access to the offending websites. Subject to certain safeguards and limitations, the Court granted the order sought.

[70] The governing legislation in Cartier was s. 37(1) of the U.K.'s Senior Courts Act 1981, 1981 c. 54:

37(1) The High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so.

[71] Mr. Justice Arnold noted a lack of clarity in the jurisprudence respecting jurisdiction to grant an injunction, and concluded that the jurisdiction is, effectively, unlimited. He accepted that courts have observed limits on the availability of injunctions, but found those limits to be matters of practice rather than of jurisdiction, and not immutable:

[96] The extent of the Court's power to grant an injunction has been considered by the House of Lords, the Privy Council and the Supreme Court in at least 12 cases in the last 40 years: Gouriet v Union of Post Office Workers [1978] AC 335, The Siskina [1979] AC 210, Castanho v Brown & Root (UK) Ltd [1981] AC 557, British Airways Board v Laker Airways Ltd [1985] AC 58, South Carolina Insurance Co Ltd v Assurantie Maatschappij De Zeven Provincien NV [1987] AC 24, Pickering v Liverpool Daily Post [1991] 2 AC 370, Kirklees MBC v Wickes Building Supplies Ltd [1993] AC 227,Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334, Mercedes-Benz AG v Leiduck [1996] AC 284, Fourie v Le Roux [2007] UKHL 1, [2007] 1 WLR 320, Tasarruf Mevduati Sigorta Fonu v Merrill Lynch Bank & Trust Company [2011] UKPC 17, [2012] 1 WLR 1721 and Ust-Kamenogorsk Hydropower Plant JSC v AES Ust-Kamenogorsk Hydropower Plant LLP [2013] UKSC 35, [2013] 1 WLR 1889.

[97] Those authorities reveal a surprising divergence of views at the highest level. Analysis of the law is not helped by two factors. First, in many 2015 BCCA 265 (CanLII)

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of these cases the effect of section 37(1) was only indirectly in issue. For example, in some of the cases the immediate issue was one of service out of the jurisdiction. Secondly, some of the dicta in these cases contain what at first blush appear to be comprehensive statements of the law which on closer reading are revealed not to be exhaustive.

[98] In my judgment, the most authoritative statement of the law as it currently stands is to be found in the speech of Lord Scott of Foscote, with whom all the other members of the House of Lords agreed on this issue, in Fourie v Le Roux. Lord Scott's analysis can be summarised in three propositions. The first is that it is necessary to distinguish between the jurisdiction of the court - that is to say, its power to grant an injunction - and the practice of the court not to do so except in a certain way and under certain circumstances.

[99] The second is his statement at [25]:

"The power of a judge sitting in the High Court to grant an injunction against a party to proceedings properly served is confirmed by, but does not derive from, section 37 of the Supreme Court Act 1981 and its statutory predecessors. It derives from the pre-Supreme Court of Judicature Act 1873 (36 & 37 Vict c 66) powers of the Chancery courts, and other courts, to grant injunctions: see section 16 of the 1873 Act and section 19(2)(b) of the 1981 Act."

[100] The third is the conclusion he drew at [30] from a review of many of the earlier authorities:

"My Lords, these authorities show, in my opinion, that, provided the court has in personam jurisdiction over the person against whom an injunction, whether interlocutory or final, is sought, the court has jurisdiction, in the strict sense, to grant it. The practice regarding the grant of injunctions, as established by judicial precedent and rules of court, has not stood still since The Siskina [1979] AC 210 was decided and is unrecognisable from the practice to which Cotton LJ was referring in North London Railway Co v Great Northern Railway Co (1883) 11 QBD 30, 39-40 ..."

[101] In my view this statement of the law confirms the correctness of the analysis in Spry, Equitable Remedies (5th ed, 1997) at 323 which was cited with approval by Lord Woolf MR in Broadmoor Special Hospital Authority v Robinson [2000] QB 775 at [20]:

"The powers of courts with equitable jurisdiction to grant injunctions are, subject to any relevant statutory restrictions, unlimited. Injunctions are granted only when to do so accords with equitable principles, but this restriction involves, not a defect of powers, but an adoption of doctrines and practices that change in their application from time to time. Unfortunately, there have sometimes been made observations by judges that tend to confuse questions of jurisdiction or of powers with questions of discretions or of practice. The preferable analysis involves a recognition of the great width of equitable powers, an historical appraisal of the categories of injunctions that have been established and an acceptance that 2015 BCCA 265 (CanLII)

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pursuant to general equitable principles injunctions may issue in new categories when this course appears appropriate."

[72] Ultimately, Arnold J. rejected the limitations set out in Lord Brandon's dicta in South Carolina Insurance Co.:

[104] Counsel for the ISPs submitted that the Court's jurisdiction to grant an injunction was, subject to two irrelevant exceptions, limited to two situations: (i) where one party to an action can show that the other party has invaded, or threatens to invade, a legal or equitable right of the former, for the enforcement of which the latter is amenable to the jurisdiction of the Court; and (ii) where one party to an action has behaved, or threatens to behave, in a manner which is unconscionable. Although this submission receives support from dicta in some of the authorities cited in paragraph 96 above, I do not accept it. In my judgment the decisions in Broadmoor and Fourie v Le Roux show that there is no such limit on the Court's jurisdiction. It is true, that as a matter of practice, that the Court exercises its discretion in accordance with fairly well settled principles, but those principles are not immutable. On the contrary, as Lord Scott pointed out, they h