Pots and kettles, glass houses and stones -- the USA and Canada exchange views on jurisdiction

In this guest post, long-time Katfriend Dan Bereskin (Bereskin & Parr LLP) gently chides the United States for its regular criticism of its northern neighbour for failure to take sufficient steps to deal with piracy and counterfeiting. The catalyst for this rebuke is the handing down by the Court of Appeal of British Columbia a few days ago of its keenly-awaited decision in Equustek's dispute with Google.  Read on.

On 16 June 2015, in a meeting convened by the World Trade Organization to review Canada’s trade regime in relation to agriculture and intellectual property, Deputy US Trade Representative Michael Punke commented on the recent Canadian Combating Counterfeit Products Act, declaring


"The United States is disappointed that the new law does not apply to pirated and counterfeit goods in customs transit control or customs transshipment control in Canada … The United States urges Canada to provide its customs officials with full ex officio authority to improve its ability to address the serious problem of pirated and counterfeit goods entering our highly integrated supply chains”.

Conveniently ignored by Mr Punke is the fact that for most of its adolescent existence as an emerging world power, the United States was a pirate nation when it came to protection of intellectual property.  Not only did it deny copyright to foreign authors for generations until US authors began to be noticed outside the USA, but US copyright law maintained the notorious manufacturing clause until 1986, and the USA did not adhere to the Berne Convention until 1989.  Also, until 2011 with the enactment of the America Invents Act, US patent law biased interference proceedings in favour of domestic inventors by requiring reduction to practice in the USA as a basis for determining priority of invention in interference proceedings. 

With this background, consider the following decision of the Court of Appeal of British Columbia (BC) in  Equustek Solutions Inc. v Google Inc., 2015 BCCA 265, released on 15 June 2015.  This is an appeal from a decision of the trial division of the Supreme Court of British Columbia [reported almost exactly a year ago on the IPKat weblog by Dan's colleague Scott MacKendrick here]. The defendants to the original action are persons who were found to be dealing in counterfeit goods, and the plaintiff succeeded in obtaining an injunction against them as well as Google who was not a party to the original action. The succinct Court of Appeal headnote reads as follows:

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.

Google had agreed to remove several hundred webpages from search results on google.ca, but the plaintiff argued this was insufficient, because the majority of online sales were to persons who would not have searched on google.ca, and because the defendants could and did move the accused content to different webpages on their websites.  Google was unwilling to block an entire category of URLs, sometimes referred to as “mother sites”, from its search results worldwide.

The case is interesting and important because Google was not a party to the litigation and is a non-resident corporation, and also because the injunction crossed international boundaries. 

British Columbia: sunny days

Under the BC Court Jurisdiction and Proceedings Transfer Act, territorial competence over the action between the plaintiffs and defendants was found to be sufficient to establish territorial competence over the injunction application. Although Google does not have employees, business offices, or servers in BC, 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 were found to be sufficient to uphold the lower court’s finding that the court has in personam jurisdiction over Google. The injunction did not violate principles of comity.  The Court of Appeal therefore dismissed Google’s appeal.

As for Google’s argument that other jurisdictions around the world could similarly claim jurisdiction, the Court stated “it is the world-wide nature of Google’s business and not any defect in the law that gives rise to that possibility”. Compare Merpel’s observation:

“Merpel marvels at the fact that a litigant such as Google can enjoy jurisdiction over most of planet Earth as a sort of de facto default, while courts have to make quite an effort to cast a judicial shadow that exceeds the terrestrial borders of their respective jurisdictions. “

The Equustek decision demonstrates that Canadian law can in appropriate cases and with proper safeguards abate counterfeiting by agile wrong-doers.  Canada has little or no reason to accept the long-standing USA complaint that it does not do enough to abate counterfeiting.  As the ancient proverb counsels, “Those who live in glass houses should not throw stones”.

Google is entitled to seek leave to appeal to the Supreme Court of Canada.  

This Kat notes with amusement that the word "British" and the depiction of the sun on the British Columbia flag represent the notion of the British Empire as being the Empire on which the sun never set.  Nowadays the real empire on which the sun never sets is ... Google.

Canada under attack illustration from Reagan Plus Cats blog.