Thursday, 30 November 2017

California Court Bars Enforcement of Cdn Injunction Against Google

     This month, the United States District Court in San Jose, California granted Google a preliminary injunction preventing enforcement of the order issued by the British Columbia Supreme Court that compels Google to remove Datalink’s websites from its search results not just in Canada but worldwide.    Equustek Solutions had sought the order after discovering Translink had stolen its trade secrets and was misrepresenting a Equustek product as a Translink product.  The B.C. order was affirmed by the B.C. Court of Appeal and by the Supreme Court of Canada (Google v. Equustek Solutions 2017 SCC 34)  – see my post from this summer and earlier.   Equustek did not defend Google’s motion.  However, the judgment itself and the reasons of the Supreme Court of Canada made clear to the California court the underlying facts and the rationale for the injunction.  

     The test the U.S. court applied is similar to the Canadian common law test for an interlocutory injunction, and consists of four requirements:   a.) a strong case on the merits, b.) a likelihood of irreparable harm, c.) the balance of equities weigh in favour of the injunction, and d.) the injunction would be in the public interest. 

     As for the merits, Google relied on the Communications Decency Act (“CDA”), which immunizes providers of interactive computer services (such as Google) from liability arising from content created by third parties.  Google is not to be treated as the publisher or speaker; Translink is the publisher while Google is merely an intermediary. 

     As for irreparable harm, it is hard to see how Google could meet that test.  After all, in the Canadian proceedings Google admitted it already has staff who delist certain offensive material from search results, and Google admitted that to delist Translink sites would not be burdensome.   Nor was there any indication that delisting Translink sites (or other sites containing intentionally misleading information) would affect Google’s revenues or would harm Google’s reputation.  Yet the U.S. court disposed of irreparable harm in a single sentence: “Google is harmed because the Canadian order restricts activity that section 230 [of the CDA] protects” (p. 5 lines 13-14). 

     The court summarily disposed also of the balancing of the equities.   It did not even address the fact that the content that was delisted misrepresents Equustek’s product as its own, which misrepresentation harms not just Equustek but also potential buyers, and possibly also the general public,  especially if the products sold by Translink have latent defects.  The Court said only that “the balance of equities favours Google because the injunction would deprive it of the benefit of federal law” (p. 5, lines 14-15).  Far from balancing equities, the court did not even consider the potential benefits of the injunction, for anyone.     

     The test’s last requirement is that the injunction be in the public interest.    The court answered that the order “threatens free speech on the global internet” (p. 6, lines 9 – 10).    “[With the passage of the CDA,] Congress wanted to encourage the unfettered and unregulated development of free speech on the Internet”, and “free speech … would be severely restricted if websites were to face tort liability for hosting user-generated content”.  (p.5 lines 19-24 and p. 6 lines 1 – 10).

     Nowhere does the ruling address the principle that in general, in foreign judgment enforcement cases,  U.S. courts are not to review the merits of the underlying judgment, or the principle of comity (Hilton v Guyot 159 US 113 (1895).  Arguably the court did not need to address those matters, insofar as California law does not provide for the enforcement of non-monetary judgments;  their courts’  power to enforce foreign judgment applies only to monetary judgments (Cal. Code of Civil Proc. S. 1715 (a)).

     By the same token, nor did the court need to base its ruling on the ground the judgment conflicts with the CDA and its supposed purpose of protecting free speech.  The California court could have rendered a narrower ruling, granting the injunction barring enforcement merely on the ground that the judgment is non-monetary. 

     The fact the court chose instead to base its ruling on inconsistency with the CDA suggests that U.S. courts may refuse to enforce a judgment on the basis that it runs contrary to a U.S. statute.  A Canadian court would probably not refuse enforcement on that basis.  In both Canada and the U.S. one defence to the enforcement of foreign judgments is that the foreign law on which the judgment is based is contrary to public policy.  This U.S. decision in Google suggests this defence is broader in the U.S. than in Canada.   In Canada public policy is equated to fundamental morality.  Inconsistency between statute law and a judgment does not necessarily mean the judgment offends public policy, particularly if the statute is not a criminal statute.  In Boardwalk Regency v Maalouf (1992) 6 O.R. (3d) 737 the Ontario Court of Appeal rejected that defence, and upheld enforcement, in a case involving a foreign judgment for a gambling debt even though an Ontario statute prohibited enforcement of gambling debts.

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