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The Google Injunction: US Federal Court Responds to Supreme Court of Canada

By Richard Stobbe

As noted in our recent summary of the Supreme Court of Canada (SCC) decision in the ongoing fight between Google and Equustek Solutions, Google lost in Canada’s top court. Google promptly filed an application in US Federal Court in California its home jurisdiction, on July 24, 2017,  seeking relief from the reach of the SCC order.

In a decision released November 2, 2017, the US court handed down its decision in Google v. Equustek, Case 5:17-cv-04207-EJD, N.D. Cal. (Nov. 2, 2017). The first few pages of the US decision provide a useful summary of the Google/Equustek story. The US Court entertained Google’s application that the SCC’s order is “unenforceable in the United States because it directly conflicts with the First Amendment, disregards the Communications Decency Act’s immunity for interactive service providers, and violates principles of international comity.”

The US court quickly concluded that Google is eligible in the US for Section 230 immunity under the Communications Decency Act. Essentially, under US law, Google is merely an intermediary or “interactive service provider”, and not a “publisher” of the offending content. As an intermediary, it takes the cover of certain provisions granting immunity from liability. Section 230 immunity is well-tilled soil in US courts, and Google has fought and won a number of cases under Section 230 already, so Google’s immunity was not news to Google.  By compelling the search engine to de-index content that is protected speech in America, the SCC order had the effect of undercutting Section 230 immunity for service providers, thereby undermining the goals of Section 230 which is to preserve free speech online.

This preliminary injunction releases Google – in the United States – from compliance with the Canadian court order. Whether Google is content to rely on this, or whether it will pursue a final decision on the full merits, and whether Google will apply to the Canadian court (as the SCC invited it to do) for a variance of the Canadian order… all remains to be seen.

 

Calgary – 15:00 MST

 

 

 

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Canada’s Top Court and the Google Injunction

By Richard Stobbe

When can a Canadian court reach across borders and control online activity that happens outside Canada? The Supreme Court of Canada (SCC) handed down its decision in Google v. Equustek Solutions Inc., a case that started as a garden-variety intellectual property (IP) dispute, and ended up in the country’s top court as a significant guide for when the law will be imposed on those beyond Canadian borders, and those who are not even a party to the original dispute. The recent judgment deals with an IP owner – Equustek – who sought a practical remedy against an IP infringer, Datalink.

Equustek alleged that Datalink had engaged in misappropriation of trade secrets, passing off and breach of confidentiality. When Datalink refused to comply with the court’s original orders to cease sales of the allegedly infringing products, Equustek turned to Google, asking the search engine provider to block or de-list Datalink’s website. Equustek argued that it could only find an effective remedy against a determined infringer by blocking access to the infringing webpages, where the competing products were being sold by Datalink. (See our earlier posts for a more detailed summary of the facts of this case.)

The issue on appeal to the SCC was whether Google can be ordered, before a trial, to “globally de-index the websites of a company which, in breach of several court orders, is using those websites to unlawfully sell the intellectual property of another company.” Applying what it called “classic interlocutory injunction jurisprudence”, the SCC rejected Google’s counter-arguments and decided to uphold the injunction against Google. Thus the current state of the law in Canada is that non-party actors such as Google can be ordered by a Canadian court to take certain steps with worldwide effect, reaching outside Canada’s borders.

There are a number of fascinating elements to this case, which is why it has garnered so much attention and commentary. It’s worth emphasizing a few points from this controversial case:

1. Remember, Google was never a party to the original lawsuit. The search engine did nothing illegal or improper, nor was it implicated in the infringing conduct other than acting as a passive intermediary. However the Court noted that Google was so involved in facilitating the allegedly infringing behavior that the Court was justified in constraining Google’s activities in order to prevent the harmful conduct of the infringer. This, the Court said, is nothing new. Non-parties such as Google are often the subject of court orders.

2. Google had offered to block the search result listings from its < google.ca > site, but Equustek argued (and the Court agreed) that, to be effective, the order against Google had to be worldwide in effect. If restricted to Canada only, the order would not have the intended effect of preventing the irreparable harm to Equustek. “The Internet has no borders — its natural habitat is global,” said the Court. “The only way to ensure that the interlocutory injunction attained its objective was to have it apply where Google operates — globally. ”

However this ignores the fact that Equustek’s IP rights are not global in scope. Indeed, there was very little analysis of Equustek’s IP rights by any of the different levels of court, something noted by the dissent. Since this entire case involved pre-trial remedies, the merits of the underlying allegations and the strength of Equustek’s IP rights were never tested at trial. In order for the injunction to make sense, one must assumed that the IP rights were valid. Even so, Equustek’s rights couldn’t possibly be worldwide in nature. There was no evidence of any worldwide patent or trademark portfolio. So, the court somehow skipped from “the internet is borderless” to “the infringed rights are borderless” and are deserving of a worldwide remedy.

3. Lastly, Google raised a few other arguments – based on freedom of speech and international comity – that the Court batted away. Free speech, the Court argued, does not extend to protect the sale of articles that infringe IP rights. And as for international comity – the idea that each country should have mutual reciprocal respect for the laws of other countries in the international community, and that one law should not compel a person to break the laws of another country – the Court sidestepped this issue.  If there is any such offense to the principles of international comity, said the Court, then Google is free to apply again to the Canadian courts to vary the order accordingly. At the date of the hearing at the SCC, Google had made no such application. However, as soon as the ink had dried on the judgement, Google applied to Federal Court in California, its home jurisdiction, seeking relief from the reach of the SCC order. This request has been supported by a line-up of intervenors in the US blaring headlines such as “Top Canadian Court Permits Worldwide Internet Censorship“!

A copy of Google’s motion for relief in the US court is here.

With this maneuver, Google may be writing a rule-book on how to delimit or constrain the scope of the SCC’s reach by appealing to US courts. As between Canada and the US, this may help clarify the limits of how Canadian court orders will impact US persons. Let’s not forget that US courts don’t hesitate to make extraterritorial orders of their own. Other countries routinely do the same, so this is by no means a uniquely Canadian scenario.

I noted in January, 2016 that this case was one to watch, and in 2017 it remains true. We will monitor and report back on the results of Google’s US Federal Court action.

Calgary – 07:00 MST

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Online Defamation: Injunctions Against Google in Canada

Courtesy of GoogleHow easy is it to get an injunction against Google? In Nazerali v. Mitchell, a man complained of online defamation, and obtained a preliminary injunction against the author of the allegedly defamatory content, the hosting company (Nozone, Inc.), the domain name registrar (GoDaddy) and Google. The Court ordered the injunction, which included the order prohibiting Google “from permitting the Google.com or Google.ca search engines from returning any search result from www.deepcapture.com.”  Essentially this results in shutting down the (allegedly) offending website, since the court considered it “impossible surgically to eliminate just the offending phrases”. While this seems to be a dramatic result, considering it was obtained on an ex-parte basis (the other side did not appear at the hearing), it is not without precedent in Canada.

In Canadian National Railway Company v. Google Inc., 2010 ONSC 3121 (CanLII), the court issued an interim injunction requiring Google to remove a blog hosted on Google’s Blogspot platform.

The injunction in Nazerali v. Mitchell was time-limited and is set to expire tomorrow (December 2).

Hat tip to Alan Macek for highlighting this case.

Calgary – 07:00 MST

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Intellectual Property Injunctions in Canada

You win some, you lose some.

An injunction is essentially a court order which prevents a company from doing something, such as using a trade-mark or a patent.  It can be a very useful tool in intellectual property litigation.  However, as we’ve reviewed in other cases, the test in Canada for obtaining – and maintaining – an injunction is not easy to meet.  The test derives from the Supreme Court decision in RJR-Macdonald Inc. v. Canada (A-G), 1994 CanLII 117 (S.C.C.) .  Two recent Canadian cases illustrate this – one win and one loss:

Calgary – 10:45 MST

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Worldwide Injunction… by Australian Court

By Richard Stobbe

Those familiar with the controversy surrounding the Google / Equustek saga will be interested to know that Canada is not alone in extending its reach in internet-related disputes. This worldwide injunction was issued by an Australian court against Twitter in the case of X. v. Twitter [2017] NSWSC 1300.

The case deals with an injunction application to stop the unauthorised publication of the plaintiff’s confidential information. The publication occurred in the form of ‘tweets’ of certain secret financial information of an (apparently) anonymous plaintiff. The plaintiff company, identified simply as ‘X’, brought an injunction application against Twitter, a non-party to the underlying dispute, arising from conduct of an (apparently) anonymous defendant.

The mystery defendant created a Twitter account impersonating the plaintiff’s CEO, and then leaked certain information via the Twitter platform. When a complaint was sent to Twitter, it removed the offending tweets and the reported account for a violation of Twitter’s online terms (https://twitter.com/rules),  specifically the rules regarding impersonation.  As so often happens with internet-based shenanigans, the offending conduct merely resurfaced under a different account, and it continued and escalated. The court was convinced that this conduct was “clearly suggestive of a malicious intention to harm the plaintiff.”

In this case, the Australian court had no trouble establishing jurisdiction over Twitter, although the company did not file any defence, nor did it submit to the Australian court in any way. Much like the Canadian court in Equustek, the Australian court indicated that its jurisdiction over non-parties, and its extra-territorial reach, was nothing new. It has been making orders of this kind long before Twitter.

The court agreed to uphold the orders against Twitter to reveal the anonymous subscriber’s identity and to cause the “Offending Material” to be removed everywhere in the world from the Twitter platform and Twitter’s websites.

So far, there are no reports that the decision has been appealed.

Calgary – 10:00 MST

 

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Court of Appeal Upholds Injunction Against Google (Equustek Solutions Inc. v. Google Inc.)

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By Richard Stobbe

Apparently Google does not appreciate being ordered by a Canadian court to remove worldwide search results. In Update on Injunction Against Google (Equustek Solutions Inc. v. Google Inc.) we reviewed a 2014 decision in which Google was ordered to de-index certain offending websites which were selling goods that were the subject of an intellectual property (IP) infringement claim (that decision was Equustek Solutions Inc. v. Jack, 2014 BCSC 1063 (CanLII)). Google appealed that decision to the B.C. Court of Appeal.

Last week, in Equustek Solutions Inc. v. Google Inc., 2015 BCCA 265, the B.C. Court of Appeal upheld the original order.

In the underlying action, Equustek alleged that Mr. Jack and Datalink Technologies designed and sold product which infringed the IP rights of Equustek. The original lawsuit was based on trademark infringement and misappropriation of trade secrets. Equustek successfully obtained injunctions prohibiting this original infringement. The infringement, however, continued through a variety of websites, and relying on search engines (such as Google) to attract customers. Equustek obtained another injunction prohibiting Google (“the world’s most popular search engine” – those are the court’s words) from delivering search results which directed customers to the offending websites.

Google appealed, arguing that this injunction was overreaching since it was beyond the Canadian court’s jurisdiction. After all, Google has no employees, business offices, or servers within British Columbia. The appeal court observed that Google’s “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, was entitled to assert jurisdiction over Google even though it was not a party to the underlying litigation. Put another way, “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.”

The court drew a parallel with a recent English case, Cartier International AG v. British Sky Broadcasting Limited, [2014] EWHC 3354 (Ch.), where Cartier sought an injunction against a number of ISPs in the UK in order to block access to the offending websites which sold counterfeit Cartier products. The court granted the order in that case.

The B.C. court rejected a creative free-speech argument (the argument that the injunction may have the effect of stifling freedom of expression from the blocked websites). (“There is no evidence that the websites in question have ever been used for lawful purposes, nor is there any reason to believe that the domain names are in any way uniquely suitable for any sort of expression other than the marketing of the illegal product.”)

The court also gave short shrift to the argument that the injunction should be restricted to “Canadian” results from google.ca as opposed to an injunction with worldwide effect (“…an order limited to the google.ca search site would not be effective.”)

If Google successfully appeals this decision, it will undoubtedly attract even more intervenors and will provide an opportunity for Canada’s top court to clarify the law in this area.

Need assistance with intellectual property disputes and internet law? Get advice from experienced counsel.

Calgary – 07:00 MDT

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Enforcing IP Judgements in Canada

US companies seeking to enforce intellectual property rights against Canadians face certain challenges. First, a US company would commence a lawsuit in a US court, and must serve the Canadian person or entity in Canada. A US plaintiff would serve a Canadian under the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (known as the “Hague Convention”). Under this Convention, there is a Central Authority designated federally and for each province and territory. In Alberta, this is done through Alberta Justice, Office of the Sheriff (Civil Enforcement) in Edmonton or Calgary. The normal procedure for service in Canada is personal service, and in Alberta this is through a “process server”. Once served, the Canadian then has to decide whether to respond to the US lawsuit.

In some case, the Canadian decides to ignore the US lawsuit. This happened in Blizzard v. Simpson, 2012 ONSC 4312 (CanLII), where Blizzard Entertainment sued Michael Simpson, a developer who was alleged to have authored and sold a “maphack” for Blizzard’s popular multiplayer game known as StarCraft II – Wings of Liberty. Mr. Simpson was served in Canada but failed to file any defence to the California lawsuit. As a result, Blizzard took default judgement in which Mr. Simpson was ordered to pay statutory damages of $150,000 legal fees and costs of $45,000. A permanent injunction was also ordered to prevent further infringement of Blizzard’s StarCraft II copyright or violation of the StarCraft II End User License Agreement (“EULA”) and Battle.net terms of use (“TOU”), among other things.

Blizzard then came to Canada to enforce their US judgement against Mr. Simpson. This required a second lawsuit (in Ontario, where Mr. Simpson resided). A Canadian court assesses the jurisdiction of the original court (by applying Canadian conflict of laws rules), and verifies that there are no defences of fraud, breach of natural justice, or public policy, which would cause the Canadian court to refuse to enforce the US judgement.

In this case, Mr. Simpson elected to defend the lawsuit in Canada. But by that time it was too late, since the court was not considering the merits of the copyright infringement case, but rather was reviewing the enforcement of a foreign judgement that had already been granted. Mr. Simpson attempted a novel defence by alleging that it was Blizzard who breached the terms of Mr. Simpson’s own website (terms that prohibited access by employees or lawyers of Blizzard). The court found this argument “untenable”, and concluded by entering the California judgement as a judgement of the Ontario court.

It is worth noting that defences to the copyright infringement claim may have been available in the California lawsuit – it is clear in both Canadian and US law that a breach of the terms of use does not (by itself) infringe copyright. It is not clear whether any copyright infringement actually occurred, but Blizzard won that argument by default.

Related Reading: Apps, Bots and Workarounds

Lessons for Canadian business: don’t ignore US lawsuits!

Calgary – 07:00 MST

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Non-Competition & Injunctions

When you buy a business, it is common for the seller to agree to non-competition restrictions. In other words, the seller agrees not to compete against you for a certain period of time afterwards. These clauses are standard, but can be tricky to enforce, as shown in the recent decision in Belron Canada Incorporated v. TCG International Inc., 2009 BCSC 596 (CanLII)

In 2005, Belron bought the Speedy Auto Glass business in Canada from TCG for about $53 million, a deal which included the trade-marks, franchise agreements and proprietary glass repair technology.  For this price, Belron expected that TCG would refrain from competing against Belron in the auto-glass repair business in Canada for seven years.

When TCG launched a website at www.windshields.com that seemed to target Canadian customers, Belron sued for breach of the non-competition promises, and sought an injunction to restrain TCG from operating the site in Canada. In this case, the court wasn’t convinced that the injunction should be issued, so the case will go to trial for a final decision on whether the site constitutes a breach of the non-competition obligations.  The Belron decision applied the recent Supreme Court of Canada decision in Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6, a case which debated the meaning of the phrase “Metropolitan City of Vancouver” in a non-competition clause. The Shafron decision also illustrates the importance of taking care in drafting clear non-competition clases.

The lessons for business?

  • In any business acquisition, it is important for both sides to get advice on non-competition, non-solicitation and non-interference clauses to ensure the clauses are clear and enforceable;
  • Where intellectual property assets are involved (as in the Belron case), special care must be taken to also review post-closing confidentiality and trade-secret obligations;
  • “Injunctive Relief” clauses, which state that one party is automatically entitled to an injunction, are not necessarily enforceable. Belron had such a clause in its contract with TCG, but the court still did not issue the injunction order.

Calgary – 09:00 MST  

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Trade-mark Injunction Update

Our earlier post reviewed one of the decisions in the ongoing trade-mark dispute between Cross-Canada Auto Body and Hyundai, the Korean car manufacturer.  This is a dispute over the distribution of Hyundai auto parts.  Hyundai’s injunction application recently failed on appeal (Hyundai Motor America v. Cross Canada Auto Body Supply (Windsor) Limited.), under the three-part test set out by the Supreme Court of Canada:

  1. There must be a serious question to be tried in the main action.
  2. It must be demonstrated that in the absence of an interlocutory injunction the plaintiff will suffer irreparable harm; and
  3. It must be demonstrated that the balance of convenience as between the parties favours the grant of an injunction against the defendants.

The Federal Court of Appeal reinforced the prevailing law that injunctions can be difficult to obtain in trade-mark cases and this factor must be taken into account in any trade-mark litigation strategy. 

Calgary – 10:45 MST

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Canadian Site-Blocking Decision

By Richard Stobbe

A streaming service known as “GoldTV” was in the business of rebroadcasting television programing through online broadcasting or streaming services to Canadian consumers. This had the effect of eating into the core business model of traditional Canadian broadcasters such as Bell Media and Rogers. Can a broadcast company fight back against this type of streaming service by seeking a site-blocking order?

Based on copyright infringement allegations, the broadcasters took GoldTV to court and obtained interim court orders.  Despite the issuance of the interim and interlocutory injunctions directly against GoldTV, some of the offending services remained accessible, and the alleged infringement continued. Basically, GoldTV remained anonymous and (practically speaking) beyond the reach of the Canadian courts.  Bell Media and Rogers then sought an order to compel Canadian ISPs to block access to GoldTV’s sites.

We know that, under Canadian law, non-party actors can be ordered by a Canadian court to take certain steps. In Google Inc. v. Equustek Solutions Inc., 2017 SCC 34 (CanLII), the Supreme Court of Canada approved a court order that required Google to globally de-index the websites of a company in breach of several court orders.  The Court affirmed that injunctions can be issued against someone who is not a party to the underlying litigation.

In this recent decision, Bell Media Inc. v. GoldTV.Biz, 2019 FC 1432 (CanLII),  the court confirmed that it can order ISPs, such as Bell Canada, Fido, Telus and Shaw, to block the offending GoldTV sites. Although there are obvious analogies to the Equustek case, the court in GoldTV indicated an order of this nature has not previously issued in Canada but has in other jurisdictions, including the United Kingdom. Equustek involved de-indexing from a search engine, whereas the GoldTV case involves site-blocking. The court issued the site-blocking order, with a 2-year sunset clause.

Teksavvy Solutions (one of the ISPs bound by the order) has appealed this decision to the Federal Court of Appeal (PDF).

Stay tuned.

 

Calgary – 07:00 MST

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Infringing Trademarks Cannot Remain on the Register

By Richard Stobbe

In a battle between the suitcase makers, the Federal Court of Appeal found that Travelway Group International Ltd. (Travelway), had infringed the trademarks owned by Wenger, and had passed off its own goods as Wenger’s. The Court granted Wenger a declaration of trademark infringement, ordered a permanent injunction prohibiting Travelway from using its infringing marks, and ordered Travelway to destroy or deliver up all wares, packages, labels and advertising material.

Basically, this was a complete victory for the well-known Swiss-cross style Wenger brand, depicted below.

travelway

However, the Federal Court of Appeal decision resulted in an anomaly: at the time of the trademark infringement lawsuit in 2013, the trademarks of both Wenger and Travelway were registered in Canada. In the appeal decision, the Court concluded, ultimately, that “each of the Travelway marks is confusing with each of the Wenger marks”, but the Court left the registrations in place, with the result that infringing, invalid trademarks were nevertheless maintained on the register in Canada.

The court in Wenger SA v. Travelway Group International Inc., 2019 FC 1104 (CanLII), corrected this, expunging the Travelway marks.

It’s also worth noting that the Travelway registrations were not found to be void ab initio, and thus benefited from the protection granted by section 19 of the Trademarks Act, which indicates that a registration is a defence to infringement. The court appears to have accepted Travelway’s argument that the protection of section 19 should extend to the variants of the Travelway marks, given that the Federal Court of Appeal found them to be permissible variants.

 

Related Reading: CANADA: Infringing Trademark Registrations Must Be Expunged, Court Finds

Calgary – 07:00 MST

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LEGO vs. LEPIN: Battle of the Brick Makers!

By Richard Stobbe

LepinCaptureIn any counterfeit battle involving the LEGO brand, we could have riffed off the successful line of LEGO Star Wars sets and made reference to the Attack of the Clones. But that’s been done, and anyway the recent legal battle between LEGO Group and a Chinese knock-off cut across more than just the Star Wars line: Shantou Meizhi Model Co., Ltd. essentially replicated the whole line of LEGO-brand products, including the popular Star Wars sets, licensed from Disney, the Friends line, the City, Technic and Creator product lines, as well as sets based on licensed movie franchises, like the Harry Potter and Batman lines.  Lepin even sells a knock-off replica of the LEGO replica of the VW Camper Van, which sells under the “Lepin” brand for USD$48.00 (the Lego version sells for US$120).

The LEGO Group recently announced a win in Guangzhou Yuexiu District Court in China, based on unfair competition and infringement of its intellectual property rights in 3-dimensional artworks of 18 LEGO sets, and a number of LEGO Minifigures. This resulted in an injunction prohibiting the production, sale or promotion of the infringing sets, and a damage award of RMB 4.5 million.

While this decision is hailed as a win for LEGO, and a blow in favour of IP rights enforcement in China, the commercial reality is that 18 sets is a drop in the proverbial ocean of counterfeits for LEGO.  A quick spin around the Lepin website shows that there is a sprawling product line available to the marketplace, most of which are direct copies of the corresponding LEGO sets. These are copies in appearance at least, since the quality of the Lepin product is … different, when compared to the quality of LEGO branded merchandise, according to some online reviews.

The connectable plastic brick which was popularized by LEGO is not, in itself, protectable from the IP perspective (patents expired long ago, and the trademarks in the brick shape were struck down in Canada). This permits entry by competitors such as MEGA-BLOKS, a company that sells a virtually identical interlocking brick, but under a distinctive brand, with original set designs, and rival licensing deals of its own – featuring the likes of Pokémon, Sesame Street, John Deere and Star Trek.

While the bricks are just bricks, the LEGO trademarks are protectable, and as LEGO established, so are the rights in three-dimensional set designs, packaging art and other elements that were shamelessly copied by the busy folks at Lepin.

Protection of market share is a complex undertaking, where an intellectual property strategy is one element.  Looking for advice on how to protect your business using IP as a tool? Contact our IP advisors to start the conversation.

Related Reading: Battle of the Blocks (looking at the battle between Lego and Mega Blocks in Canada).

 

Calgary – 07:00 MT

 

 

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Google vs. Equustek: Google Loses Another Round

By Richard Stobbe

How far can Canadian courts reach when making orders that seek to control the conduct of foreign companies outside of Canada? This controversial question is still being decided, bit by bit, in both Canadian and US courts.  In our past posts we have written about a 2014 pre-trial temporary court order that required Google to de-index certain sites from Google’s worldwide search results, based on an underlying lawsuit that the plaintiff, Equustek, brought against the defendants back in 2011.  Google challenged the order requiring it to delist worldwide search results, and fought this order all the way up to the Supreme Court of Canada… where Google lost.

On July 24, 2017, approximately one month after the SCC decision, Google filed a complaint in US Federal Court, seeking an order that the injunction issued by the BC court is unlawful and unenforceable in the United States. That order was granted, first on a preliminary application on November 2, 2017 and then in a final ruling on December 14, 2017. With that US court decision in hand, Google came back to the BC court which had issued the original order, to vary the scope of that order.

On April 16, 2018, in Equustek Solutions Inc. v Jack, 2018 BCSC 610 (CanLII), the BC court again rejected Google’s requests. The BC court said that the US decision (which was in Google’s favour) did not establish that the injunction requires Google to violate American law. And without any significant change in circumstances, the court reasoned, there was no reason to change the original order.  As a result, the temporary order against Google – which has been in place since 2014 – remains in place, pending outcome of the trial.

The outcome of that trial will be closely watched. As I mentioned in my earlier article, there has been very little analysis of Equustek’s IP rights by any of the different levels of court. Since this entire case involved pre-trial remedies, the merits of the underlying allegations and the strength of Equustek’s IP rights have never been tested at trial. In order for the injunction to make sense, one must assume that the IP rights were valid. Even if they are valid, it is questionable whether Equustek’s rights are worldwide in nature since there was no evidence of any worldwide patent rights or international trademark portfolio.  We can only hope that the trial decision, and Google’s decision to appeal the latest BC court decision, will clarify these issues.

 

Calgary – 07:00 MDT

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Google vs. Equustek Saga: The Final Countdown

By Richard Stobbe

Last month we asked: The Google vs. Equustek Decision: What comes next?

Part of the answer was handed down recently by a B.C. court in Equustek Solutions Inc. v Jack, 2018 BCSC 329 (CanLII), after Google applied to vacate or vary the original order of Madam Justice Fenlon, which was granted way back in 2014. That was the order that set off a furious international debate about the reach of Canadian courts, since it required Google to de-index certain sites from Google’s worldwide search results, based on an underlying lawsuit that the plaintiff Equustek brought against the defendants (which is finally set for trial in April, 2018).

Google of course was always invited to seek a variation of that original court order. As noted by the latest judgment, that right to apply to vary has been recognized by the B.C. Court of Appeal and the Supreme Court of Canada. After Google received a favourable decision last year from a US court, the way was paved to vary the original order that has caused Google so much heartburn. The next step is that Google will seek a cancellation or limitation of the scope of that original order, so that the order applies only to search results in Canada through google.ca.

The last step, with luck, will be a hearing of the merits of the underlying IP claims; some commentators have questioned why Google was used to obtain a practical worldwide remedy when the IP rights asserted by Equustek do not appear to be global in scope. As I mentioned in my earlier article, there has been very little analysis of Equustek’s IP rights by any of the different levels of court. Since this entire case involved pre-trial remedies, the merits of the underlying allegations and the strength of Equustek’s IP rights have never been tested at trial. In order for the injunction to make sense, one must assume that the IP rights were valid. Even if they are valid, Equustek’s rights couldn’t possibly be worldwide in nature. There was no evidence of any worldwide patent rights or international trademark portfolio. So, the court somehow skipped from “the internet is borderless” to “the infringed rights are borderless” and are deserving of a worldwide remedy.

To be continued…

 

Calgary – 07:00 MST

 

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Google v. The Court: Free Speech and IP Rights (Part 1)

 
By Richard Stobbe

Google Inc. v. Equustek Solutions Inc., et al., the long-running case involving a court’s ability to restrict online search results, and Google’s obligations to restrict search results has finally reached the Supreme Court of Canada (SCC). Hearings are proceeding this week, and the list of intervenors jostling for position at the podium is like a who’s-who of free speech advocates and media lobby groups. Here is a list of many of the intervenors who will have representatives in attendance, some of whom have their 10 minutes of fame to speak at the hearing:

  • The Attorney General of Canada,
  • Attorney General of Ontario,
  • Canadian Civil Liberties Association,
  • OpenMedia Engagement Network,
  • Reporters Committee for Freedom of the Press,
  • American Society of News Editors,
  • Association of Alternative Newsmedia,
  • Center for Investigative Reporting,
  • Dow Jones & Company, Inc.,
  • First Amendment Coalition,
  • First Look Media Works Inc.,
  • New England First Amendment Coalition,
  • Newspaper Association of America,
  • AOL Inc.,
  • California Newspaper Publishers Association,
  • Associated Press,
  • Investigative Reporting Workshop at American University,
  • Online News Association and the Society of Professional Journalists (joint as the Media Coalition),
  • Human Rights Watch,
  • ARTICLE 19,
  • Open Net (Korea),
  • Software Freedom Law Centre and the Center for Technology and Society (joint),
  • Wikimedia Foundation,
  • British Columbia Civil Liberties Association,
  • Electronic Frontier Foundation,
  • International Federation of the Phonographic Industry,
  • Music Canada,
  • Canadian Publishers’ Council,
  • Association of Canadian Publishers,
  • International Confederation of Societies of Authors and Composers,
  • International Confederation of Music Publishers and the Worldwide Independent Network (joint) and
  • International Federation of Film Producers Associations.

The line-up at Starbucks must have been killer.

The case has generated a lot of interest, including this recent article (Should Canadian Courts Have the Power to Censor Search Results?) which speaks to the underlying unease that many have with the precedent that could be set and its wider implications for free speech.

You may recall that this case is originally about IP rights, not free speech rights. Equustek sued Datalink Technologies for infringement of the IP rights of Equustek. The original lawsuit was based on trademark infringement and misappropriation of trade secrets. Equustek successfully obtained injunctions prohibiting this infringement. It was Equustek’s efforts at stopping the ongoing online infringement, however, that first led to the injunction prohibiting Google from serving up search results which directed customers to the infringing websites.

It is common for an intellectual property infringer (as the defendant Datalink was in this case) to be ordered to remove offending material from a website. Even an intermediary such as YouTube or another social media platform, can be compelled to remove infringing material – infringing trademarks, counterfeit products, even defamatory materials. That is not unusual, nor should it automatically touch off a debate about free speech rights and government censorship.

This is because the Charter-protected rights of freedom of speech are much different from the enforcement of IP rights.

The Court of Appeal did turn its attention to free speech issues, noting that “courts should be very cautious in making orders that might place limits on expression in another country. Where there is a realistic possibility that an order with extraterritorial effect may offend another state’s core values, the order should not be made.  In the case before us, there is no realistic assertion that the judge’s order will offend the sensibilities of any other nation. It has not been suggested that the order prohibiting the defendants from advertising wares that violate the intellectual property rights of the plaintiffs offends the core values of any nation. The order made against Google is a very limited ancillary order designed to ensure that the plaintiffs’ core rights are respected.”

Thus, the fear cannot be that this order against Google impinges on free-speech rights; rather, there is a broader fear about the ability of any court to order a search engine to restrict certain search results in a way that might be used to restrict free speech rights in other situations.  In Canada, the Charter guarantees that everyone has the right to: “freedom of …expression, including freedom of the press and other media of communication…” It is important to remember that in Canada a corporation is not entitled to guarantees found in Section 7 of the Charter. (See: Irwin Toy Ltd. v. Quebec (Attorney General), 1989 CanLII 87 (SCC), [1989] 1 S.C.R. 927)

So, while there have been complaints that Charter rights have been given short shrift in the lower court decisions dealing with the injunction against Google, it’s worth remembering that Google cannot avail itself of these protections. Sorry Google, but you’re not a natural person and you don’t enjoy Charter rights. [See Part 2 for more discussion on a corporation’s entitlement to Charter protections.]

Although free speech will be hotly debated at the courthouse, the Google case is, perhaps, not the appropriate case to test the limits of free speech. This is a case about IP rights enforcement, not government censorship.

 

Calgary – 07:00 MT

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Craft Beer Trademarks (Part 2)

By Richard Stobbe

In Part 1 we noted the growth in the craft beer industry in Canada and the U.S., and how this has spawned some interesting trademark disputes.

The case of  Brooklyn Brewery Corp. v. Black Ops Brewing, Inc. (January 7, 2016) pitted New York-based Brooklyn Brewery Corporation against California-based Black Ops Brewing, Inc. in a fight over the use of the mark BLACK OPS for beer. Brooklyn Brewery established sales, since 2007, of its beer under the registered trademark BROOKLYN BLACK OPS (for $29.99 a bottle!). It objected to the use of the name BLACK OPS by the California brewery, which commenced operations in 2015.

The California brewery argued that a distinction should be made between the name of the brewery versus the names of individual beers within the product line, which had different identifying names such as VALOR, SHRAPNEL and the BLONDE BOMBER.  However, this argument fell apart under evidence that the term “Black Ops” appeared on each label of each of the above-listed beers, and there was clear evidence that the California brewery applied for registration of the mark BLACK OPS BREWING in association with beer in the USPTO.

The court was convinced that use of the marks “Black Ops Brewing,” “Black Ops,” and “blackopsbrewery.com” created “a likelihood that the consuming public will be confused as to who makes what product.” An preliminary injunction was issued barring Black Ops Brewing from selling beer using the name BLACK OPS.

Black Ops Brewing has since rebranded to Tactical Ops Brewing.

 

Calgary – 07:00 MST

 

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“Wow Moments” and Industrial Design Infringement

By Richard Stobbe

An inventor had a “wow” moment when he came across a design improvement for cold-weather visors – something suitable for the snowmobile helmet market. The helmet maker brought the improved helmet to market and also pursued both patent and industrial design protection. The patent application was ultimately abandoned, but the industrial design registration was issued in 2010 for the “Helmet Face Shield” design, which purports to protect the visor portion of a snowmobile helmet.

AFX Licensing, the owner of the invention, sued a competitor for infringement of the registered industrial design. AFX sought an injunction and damages for infringement under the Industrial Design Act.  The competitor – HJC America – countered with an application to expunge the registration on the basis of invalidity. HJC argued that the design was invalid due to a lack of originality and due to functionality.

Can a snowmobile visor be protected using IP rights?

A registrable industrial design has to meet certain criteria: (i) it must differ substantially from the prior art (in other words it must be “original”); (ii) it cannot closely resemble any other registered industrial designs; and (iii) it cannot have been published more than a year before application for registration.

Visor-Capture

In AFX Licensing Corporation v. HJC America, Inc., 2016 FC 435 (CanLII),  the court decided that AFX’s industrial design registration was valid but was not infringed by the HJC product because the court saw “substantial differences” between the two designs. In summarizing, the court noted the following:

“First, the protection offered by the industrial design regime is different from that of the patent regime… the patent regime protects functionality and the design regime protects the aesthetic features of any given product.” (Emphasis added)

The industrial design registration obtained by AFX does “not confer on AFX a monopoly over double-walled anti-fogging face shields in Canada. Rather, it provides a measure of protection for any shield that is substantially similar to that depicted in the ID 964 illustrations, and it cannot be said that the HJ-17L meets that threshold.”

The infringement claim and the expungement counter-claim were both dismissed.

Calgary – 07:00

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Google Appeals Equustek to SCC

By Richard Stobbe

Courtesy of GoogleThe Google and Equustek Saga has garnered attention across Canada and even among US commentators (something rare for Canadian decisions). In September, 2015, Google Inc. filed an application for leave to appeal the decision to the Supreme Court of Canada (SCC), and as of January, 2016, the leave application materials have been submitted to the court. With luck, the SCC will take up the case, and we’ll see a decision in late 2016.

If the case does proceed, you can expect the intervenors to line up for a place at the table.

The Electronic Frontier Foundation (EFF), for example, unsuccessfully argued against the “dangerous ruling” at the BC Court of Appeal level, and they can be expected to advance their arguments at the SCC. Their position is that “a worldwide injunction would set a dangerous precedent that could later be used to limit the legal and equitable rights of others to receive speech.” The EFF raised US free speech arguments – okay, so the US Constitution may not be persuasive at the Canadian court, but worth a try. They maintain that “No single country should have veto power over Internet speech.”

Further reading: Is Google “Feeling Lucky” at the Supreme Court?

Stay tuned for more updates – this is one to watch.

Calgary – 07:00 MT

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Competing After Employment (Part 2)

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By Richard Stobbe

A few weeks ago, Jawbone, a fitness tracking hardware and software maker, sued its arch-rival Fitbit, alleging that Fitbit lured its employees away to obtain access Jawbone’s confidential information and product plans. How would this play out in Canada? In our earlier post (Competing After Employment (Part 1)) we considered a case in which the employer could not describe the confidential information with enough specificity and detail, and the employer was unable to get its injunction form the court.

In Brandt Engineering Products Ltd v Rockford Engineering Works Ltd., 2014 SKQB 339 (CanLII), the employer enjoyed a different result.

After several employees left BEPL to join a competitor, BEPL sued its competitor alleging that the former employees of BEPL each breached their fiduciary duties, breached confidence, and breached their employment contracts, among other things. BEPL sought an injunction to prevent the use of confidential information by the ex-employees and their new employer.

The court noted that “each of these individuals were either professionals or they were engaged in doing, assisting or supporting the work of the professional/design team at BEPL. I am satisfied from the evidence that each of them would have been aware of the confidential and proprietary nature of the designs, processes, customer and supplier lists and generally and specifically financial, organizational and technical information respecting BEPL and its operations. Whether by virtue of their employment contracts, their status as professionals, the confidentiality and proprietary notices which much of BEPL’s documentation contained, or the role that each of the individual defendants played as members of the design group at BEPL, each could not help but be aware of and recognize the confidential and proprietary nature and character of much of the information to which they had access and were privy.” (Emphasis added)

It was discovered during the course of the lawsuit that the ex-employees had downloaded or removed various confidential documents (“approximately 9,713 documents” burned onto discs and a “banker’s box of BEPL materials”) and provided some of this information to the new employer, BEPL’s competitor.

The court granted the injunction restricting the ex-employees and their new employer from using confidential information and upholding the non-solicitation covenants. The court made a few important points which bear repeating:

1. “Where employees have a non-competition clause in their contract of employment or they are determined to be employees having fiduciary obligations – the employee has a continuing duty to maintain confidences for a reasonable period of time and the employee is not permitted to actively solicit the former employer’s customers nor to use confidential information to the employee’s own employment advantage…”

2. “An interim injunction should not issue for the sole purpose of eliminating competition or effectively reducing it. In cases such as this, the purpose of the injunction is to constrain improper competition — that is to say the use or potential use by former employees of confidential and proprietary information, the property of and acquired from a previous employer to whom the employees owe a fiduciary duty of confidentiality, to compete with that employer.”

3. It is also worth noting that:
– the terms of the employment agreements as well as internal confidentiality notices helped bolster the argument that these ex-employees were aware of their confidentiality obligations, and
– the evidence of misappropriation of specific documents avoided the problem in the JTT Electronics case regarding the need to describe the confidential information with enough specificity and detail.

In summary, this case succeeded in enjoining improper competition by departing employees. Get advice on departing employees, restrictive covenants and intellectual property protection from experienced counsel.

Calgary – 07:00 MDT

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Court Orders Google to Remove Site from Worldwide Search Results

By Richard Stobbe

In a recent decision by the British Columbia courts (Equustek Solutions Inc. v Jack , 2014 BCSC 1063), Google has been ordered to de-index a website selling goods that were the subject of intellectual property (IP) infringement claims. While this may seem quotidian – after all, Google does comply with de-indexing requests on a regular and voluntary basis – this decision has broader implications for several reasons. This decision is the first Canadian decision to compel Google to delist a website after the so-called “right to be forgotten” case in the EU, and while that case involved personal privacy rights rather than IP rights, both cases have far-reaching implications for Google’s role in providing a practical remedy for an aggrieved party. This is a role that Google has resisted, but cannot avoid in light of its ever-expanding presence in the lives of individuals and the affairs of business.

The underlying dispute involved a trade-secret misappropriation and passing-off claim by a manufacturer against a rival company. Specifically, the plaintiff Equustek alleged that a competing product known as GW1000 was an unauthorized knock-off, built using trade secrets of the plaintiff. The plaintiff Equustek won an initial order barring sales of the offending GW1000 product and then engaged in a time-consuming process of chasing the defendant to obtain some meaningful and practical remedy. This involved repeated requests to Google to block hundreds of specific individual webpages and URLs from Google Canada search results, a game that the court described as “whac-a-mole”. Finally the plaintiff sought an order compelling Google to de-index the defendant’s sites from all Google search results worldwide. The resulting order is important for a number of reasons:

  1. In order to make its order, the court had to assert jurisdiction over Google Inc. rather than the Canadian subsidiary Google Canada. In coming to this decision, the B.C. court relied in part on the EU “right to be forgotten” case. Interestingly, the court commented that the California choice-of-law clauses in Google’s various user agreements and advertising contracts did not prevent the Canadian court from asserting jurisdiction. This is due to the fact that this dispute did not arise out of any contract-related claims. Rather, the court found that it had scope to make an order (with extra-territorial reach) over Google (a non-party) under its inherent jurisdiction under the Law and Equity Act.
  2. The court also commented on the fact that Google is not merely a passive site, but rather it conduct active and ongoing business with British Columbia companies and individuals.
  3. The court found that blocking individual URLs was not as effective as blocking so-called “mother sites”. In effect, the court agreed that Google’s current practice of voluntarily complying with individual requests to block specific URLs does not provide an effective remedy. This will certainly be cited in future website blocking cases.
  4. Regarding Google’s role, the court commented that “Google is an innocent bystander but it is unwittingly facilitating the defendants’ ongoing breaches of this Court’s orders. There is no other practical way for the defendants’ website sales to be stopped.”

After renewing the traditional criteria for assessing the merits of an injunction application, the court granted the order. Google is appealing this decision.

Calgary – 07:00 MST

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