IP Rights: Where Does the Internet Stop?

September 25, 2017

The Supreme Court of Canada (SCC) recently delivered a
ruling in Google
v Equustek 2017 SCC
. More than just another landmark ruling for Canada, it has potentially
significant global repercussions. By a margin of 7-2, the SCC upheld a British
Columbia court ruling which ordered Google to de-list websites and entire
domains from its global search index.

This global ‘Google Order’ reaffirms the concept that ‘the
Internet has no borders, its natural habitat is global.’ By injuncting Google
globally, it also highlights the cross-border nature of intellectual property as
the cause of legal problems in multiple jurisdictions. But is IP the appropriate
battleground to resolve the conflict between a borderless Internet and our
territorial legal system?

Perhaps inevitably, the SCC decision has become the fulcrum
for a range of issues extending far beyond the merits of the case. While Google
is said to be ‘considering its options’, lawyers are busily re-examining
questions relating to extra-territoriality, freedom of information, and enforcement.
IP is once again centre stage in a cross-border case.

The basic facts

The facts of the dispute were straightforward. Canadian
technology company Equustek Solutions sued distributor Datalink Technology
Gateways for listing its products on Google as their own. Google cooperated,
but only insofar as de-indexing individual pages, and even then, only on
Google.ca. The complaint from Google that they were not a party to the case and
should not therefore have to comply with broader injunctions was dismissed.

There was apparent uniformity on the essential facts: the
listings did infringe IP, Equustek had a valid claim and faced irreparable damage,
and the listings should be removed in some form. Google even suggested that it was
neither inconvenient nor especially costly to delist the websites globally.

and inflation of impact

Why then did this result in such a big fight, and on what
basis? The answer to the first question is self-evident – although it was a clear-cut
case, it could set precedents for more aggressive actions elsewhere. Although not
a direct party to the proceedings, Google nevertheless raised a ‘freedom of
information / freedom of expression’ defence, arguing that, despite their Canadian
actions being in breach, this might not apply in other jurisdictions similarly
affected by the global injunction.

Some observers argued likewise. The libertarian EFF
(Electronic Frontier Foundation), which must have faced a dilemma in whether to
side with government or Google, characterised the decision as a ‘race to the
bottom’. Others, including the music industry, welcomed it as fair protection
for creators and owners of IP rights. Despite two dissenting judges, the
Supreme Court was pragmatic: they issued an injunction against Google, and did
it globally; but if Google can subsequently demonstrate that it does cause
problems in other jurisdictions, they will reconsider. As justification, the
judgment listed other global injunctions, including the take down of defamatory
material, copyright enforcement issues, and the EU right to be forgotten. Here,
the IP community should take note of the common theme: IP is becoming the legal
test-bed for cross-jurisdictional disputes.

That so many such disputes centre around the Internet is
no surprise – without borders, geography has little meaning. It also creates a
perfect liquidity of data with IP becoming the legal manifestation of
information: creating, sharing, protecting, and indeed, removing it. IP law
sharply defines territorial boundaries. Combine the Internet, information, and
IP, and certain issues come to a head. However, it is unclear whether IP is the
solution for the information problem, or the cause.

complexity and the Equustek dangers

The facts of the Equustek
case were so transparent that the court was comfortable in fighting this
battle. Freedom of expression was addressed as follows: removing listings ‘doesn’t
offend the core values of any nation’, and ‘we have not, to date, accepted that
freedom of expression requires the facilitation of the unlawful sale of goods’.
Notably, the decision took little time on the IP issues. There is no significant
debate that IP was infringed in Canada, but are there any territories where
this would not have been an infringement? When considering its options, Google
may consider this question carefully.

Similar cases citing cross-border injunctions have also
been quite factually clear-cut. These have involved the removal of defamatory
material and/or the shutting down of illegal content sharing – fundamental
elements in a reasonable global copyright system. But IP is infinitely more
complex, requiring caution to be exercised when venturing into such areas.

In the patent sphere, for example, cross-border decisions
have not fared well in the context of super-territorial issues. The Internet
produces complex questions, such as how to invoke a telecoms patent where
infringement causes diverse elements in multiple jurisdictions.

Assorted enforcement initiatives have already failed. Around
the millennium, pan-European injunctions were favoured, but then faded. The
criminal enforcement directive, proposed by the EU, also failed, largely
because of political sensitivities in enforcing a complex, nuanced monopoly which
potentially breached national sovereignty. Meanwhile the Unified Patent Court (UPC)
is facing a similar dilemma in Germany following a constitutional challenge. Global
patents remain a distant prospect with all efforts to harmonise the system
globally being hit by too many regional political obstacles.

Put simply, rights and wrongs in patent dispute are
difficult to determine. Even in less technically complex areas, jurisdictional
differences can arise. The ‘right to be forgotten’ is a good example. The EU (fervent
supporters of the concept) and the USA (which is not) are so distanced from
each other that an argument to enforce such a case globally – that does not ‘offend
the core values of any nation’ – might fail in an instant.

Enforcement issues

Finally, there is the issue of enforcement. Because they
are primarily economic in nature, IP remedies become a little easier for the
courts to effect. There is a but. For although legal systems remain territorial
– as do remedies – the realities of global enforcement, whether for IP or any
other right, are opaque.

As it ‘considers its options’ Google will presumably
delist globally to avoid potentially punitive sanctions in Canada (assuming it does
not withdraw from the territory), since it is bound by the injunction. Other less
global entities may have greater mobility. Datalink, which kick-started the
litigation, hurriedly left Canada to trade from an unknown location.

The Equustek
case has been high-profile, high-value and global, with ramifications for everyone.
However, judges around the world are unlikely to enforce injunctions imposed by
their peers in other territories. What we might see instead is cooperation in
obtaining evidence – courts following suit in issuing global injunctions which
they can enforce where evidence is concerned. Accordingly, it may be worth owners
mounting proceedings for global injunctions: that threat alone could be a
powerful deterrent for would-be infringers.

Implications for businesses

If positioned on the wrong side of an action, careful
consideration will be necessary when considering a primary place of business, in
particular how important a particular territory is if a locally-enforceable,
globally-imposed injunction is awarded there. The Internet has become akin to
international waters surrounding islands which are governed by local courts. As
a result, it may be necessary for every global or multi-national player to reconsider
their position and their risk profile, and to acknowledge that the legal
community is endeavouring to rectify the situation.

When it comes to creating a level playing-field in Europe,
Google v Equustek may accelerate the
moves that have been observed for more than a decade to unify rights across the
continent. The UPC, a court that will be common to the Contracting Member
States of the EU and which they have been working very hard to establish,
should get a very strong boost from this precedent, together with some useful
guidance on a healthy middle ground. Although the UPC seems to have stalled for
now, we may yet see national courts take lessons from it and strive towards a de
facto unified enforcement system across Europe. Even with Brexit making things
harder for the UK, strong ties between IP courts across Europe could mean that,
in this respect, the UK is not an island either. As elsewhere, the Internet has
provoked a major rethink of how businesses can and should operate at an
international level.


A potent cocktail of the Internet, information and
intellectual property provides strong ingredients for a legal debate concerning
the imposition and enforcement of global injunctions – when the facts are clear
– as we move towards areas where ‘natural law’ indicates that most
jurisdictions will adopt a comparable view.

The judges in Google
v Equustek
 certainly seem to have been pragmatic when faced with straightforward
facts. Their balance of commentary between rights holders and freedom of speech
exponents suggests that the Canadian Supreme Court did indeed find a healthy
middle ground.

It will be intriguing to see what Google does next and whether
the Canadian Court makes good on rethinking the injunction should Google demonstrate
a global discrepancy. In the interim, IP is proving to be a valuable test-bed
for resolving the rising tensions between the Internet and the law.

Gwilym Roberts is Partner and Chairman at Kilburn &