SCC rules against U.S. tech giants: “The internet has no borders”

By Justin Ling June 29, 201729 June 2017

SCC rules against U.S. tech giants: “The internet has no borders”


It’s been a bad week for two internet giants.

Both Facebook and Google lost landmark decisions at the Supreme Court of Canada over the last few days, with the top court ruling against Google in a case involving de-indexing websites, and against Facebook in a case about forum selection.

The pair of rulings signals a move to establish that just because these tech giants are headquartered in California — or elsewhere — it doesn’t mean they can wiggle out from under Canadian legal jurisdiction.

In Equustek v Google, a small British Columbia tech company was vying to have a malicious competitor’s website blocked from Google searches. The competition had taken Equustek’s product, rebranded it, and sold it openly on its site, directly damaging the company’s bottom line. While Equustek took legal action, the owner of the site had fled and could not be located. The company’s next step was to ask Google to de-list the site.

Google complied — as it often does for cases of intellectual property — but the site owner simply set up new subdomains on his website advertising the goods. It was a game of cat-and-mouse. What’s more, the de-indexing only applied for the Canadian version of Google. So Equustek asked that the entire site be removed from Google search results, and that it apply to all international Google searches. Google refused and the case then went to court.

The case raised primary freedom of expression concerns: Would this open Pandora’s box, giving litigants the power to effectively deep-six websites they believe are libelous?

The Supreme Court didn’t think so.

“This is not an order to remove speech that, on its face, engages freedom of expression values, it is an order to de-index websites that are in violation of several court orders,” the majority wrote. “We have not, to date, accepted that freedom of expression requires the facilitation of the unlawful sale of goods.” Furthermore, the justices invited Google to apply to the B.C. court should they fear the order — which applies only as Equustek attempts to bring their competition to court — could injure freedom of speech.

The Canadian Civil Liberties Association, an intervenor on the case, applauded the ruling for confirming “any worldwide order must respect this fundamental right, and that courts must tread carefully when global orders might implicate the core values of other countries.” Though, they add: “albeit not strongly enough.”

The litany of intervenors, which included the California Newspaper Publishers Association, the Associated Press, the Wikimedia Foundation, and Music Canada, highlighted the competing interests at play. Some feared being the target of these de-indexing orders, while others saw this as an opportunity to fight copyright infringement – although it is unlikely that this decision will do much to change the current copyright system, which is governed by a notice-and-notice regime.

In Douez v. Facebook, a B.C. woman took issue with Facebook’s penchant for deploying its users’ photos in its sponsored content postings. She contended it violated the province’s Privacy Act.

Facebook invited her to challenge the provision, but noted that the B.C. Supreme Court, which handles all Privacy Act cases in the provinces, was not the right venue; in signing off on the terms of use for the site, she had agreed that California would be the jurisdiction for all cases relating to the terms.

The top court ended up determining that the Privacy Act superseded the forum selection clause in the Facebook agreement, slightly altering the previous test for when those sorts of clauses apply. While they didn’t weigh in on whether the sponsored posts did, in fact, violate the Privacy Act, they did allow the challenge to go forward in B.C.

“It is clear from the evidence that there was gross inequality of bargaining power between the parties. Individual consumers in this context are faced with little choice but to accept Facebook’s terms of use,” the court wrote. “Additionally, Canadian courts have a greater interest in adjudicating cases impinging on constitutional and quasi-constitutional rights because these rights play an essential role in a free and democratic society and embody key Canadian values.”

Both the Facebook and Equustek decisions are a clear signal that the Supreme Court sees little issue with exerting its jurisdiction over the internet.

As the majority wrote in Equustek: “The internet has no borders — its natural habitat is global.”

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