You can Google it: Supreme Court of Canada grants leave to appeal global injunction

Alex Sarabura - 

The Supreme Court of Canada has granted leave to hear an important case respecting the ability of Canadian courts to enjoin the behaviour of organizations with respect to their operations outside of Canada.

On February 18, 2016, the Supreme Court of Canada granted Google Inc. leave to appeal the judgment of the British Columbia Court of Appeal in Equustek Solutions Inc. v. Google Inc., in which the BCCA upheld an interlocutory injunction prohibiting Google from including specific websites in its search results worldwide.

The plaintiff’s request for the injunction against Google arose from a lawsuit in which the plaintiff alleged that the defendant was passing off its goods as those of the plaintiff.

After the plaintiff commenced the proceeding, the defendant left BC while still selling the knock-off goods over the internet, relying on search results to reach customers.  The plaintiff alleged that it lacked an effective way of stopping the defendant’s conduct, and sought an interlocutory injunction prohibiting Google from displaying the defendants’ websites in its search results anywhere in the world.  The Supreme Court of British Columbia deemed the injunction necessary to ensure that the orders against the defendants were effective, and granted the injunction.

Google appealed, arguing that the injunction represented an impermissible exercise of extra-territorial jurisdiction; improperly ensnared an innocent third-party (Google); and exceeded the Court’s jurisdiction.  Google also argued that the injunction violated Google and the public’s right to freedom of expression.

The BCCA rejected every one of Google’s arguments:

  • The Court found that it had jurisdiction over Google, both because the underlying action was connected to BC and because Google conducted business in BC (in response to Google’s concern that this meant that Google conducted business everywhere, the Court responded that if so, it was because of Google’s business model and was therefore Google’s problem);
  • The Court found that it had the right to act globally, both based on historical precedent, and because doing so would not offend international comity;
  • The Court found that the fact that Google was a third-party didn’t allow it to avoid the Court’s reach, based on precedent related to Norwich orders (whereby third‑parties are ordered to provide assistance to the Court); and
  • The Court dismissed Google’s arguments related to free speech, asserting that speech designed to allow the infringement of intellectual property would rarely be protected.

In seeking leave to appeal, Google generally argued that the BCCA did not focus sufficiently on the public interest, particularly in respect of freedom of speech.  Beyond that, Google highlighted three issues raised by the BCCA decision.

  1. When should a court be able to block search results, given the importance of freedom of expression, and what limits should be imposed?
  2. Do Canadian courts have the authority to block extra-jurisdictional search results?
  3. When is a litigant entitled to an interlocutory injunction against an innocent third-party?  Should the current approach to granting injunctions against parties to litigation be properly applicable to non-parties to the litigation?

It is not clear why the SCC granted leave; however, it is interesting to note that the BCCA decision came out before the SCC’s decision in Chevron Corp. v. Yaiguaje, in which the SCC considered the scope of Canadian courts’ jurisdiction (albeit in the context of an action to enforce a judgment).  It is possible that the SCC will take the Google appeal as an opportunity to further clarify Chevron; it is also possible that the SCC simply sees a need to craft jurisdictional guidance for the internet age.  Whatever the result, both intellectual property owners and internet-based organizations will be watching closely.

Previews of musical works do not infringe copyright

As we've discussed in a number of recent blog posts, the Supreme Court of Canada this week released a number of major copyright-related decisions. In one of these cases, Society of Composers, Authors and Music Publishers of Canada v. Bell Canada (SOCAN), the Supreme Court considered whether there would be a tariff for the communication of previews of musical works over the internet.

Online music previews are short extracts of musical works and assist a consumer in deciding musical purchases. The Copyright Board concluded that those who make previews available, and the users that listen to previews, were entitled to avail themselves of the fair dealing exception under section 29 of the Copyright Act, as listening to the previews constituted research of a purchasing decision (see our previous post). The Federal Court of Appeal upheld the Copyright Board’s decision and SOCAN sought leave to appeal to the Supreme Court of Canada.

In upholding the decisions below, the Supreme Court concluded that the previews constituted fair dealing, applying the test articulated by the Court in CCH Canadian Ltd v. Law Society of Canada (CCH).

In applying the first step of the test and determining whether the previews are provided for the purpose of “research”, the Court rejected arguments limiting the definition of “research” and affirmed that the term be given a “large and liberal interpretation”. Whether the dealing constitutes “research” should be analyzed from the perspective of the user or consumer rather than the online service provider since it is the consumer who uses the preview for the purpose of conducting research to identify which musical work to purchase. As a result, the Court concluded that the previews were provided for the purposes of research.

The second step of the test required determining whether the use of the previews was “fair” in accordance with the six CCH factors: (i) the purpose, (ii) character and (iii) amount of the dealing, (iv) the existence of any alternatives to the dealing, (v) the nature of the work, and (vi) the effect of the dealing on the work. The Court concluded that: (i) the main purpose to provide previews was to facilitate the consumer’s research purposes; (ii) the previews were streamed and not downloaded, after listening, the preview was automatically deleted from the user’s computer, and copies could not be duplicated or further disseminated; (iii) regarding the quantity, the Court confirmed the “amount” meant the “quantity of the work taken”, the proportion of the excerpt used in relation to the whole work; (iv) previews were found to be reasonably necessary to help consumers research what to purchase since there were no other reasonable alternatives that could effectively preview the musical work; (v) previews were also necessary in disseminating the work because dissemination required a consumer to be able to locate and identify a work he or she wanted to buy; (vi) since the previews served to increase the sale of the work, they could not be said to be in competition with it, and thus the dealing did not adversely affect the work.

Free delivery! Supreme Court rules no copyright royalties for internet transmission of downloads

David Elder -

In a major, but slim, victory for proponents of electronic commerce, a majority of the Supreme Court of Canada has ruled that online sellers of music and video game downloads are not required to pay more copyright royalties than their “bricks and mortar” counterparts, solely because the products from the virtual stores are delivered via the internet.

In addition, although not considered by the Court, these rulings would also suggest that another copyright tariff, for the delivery of ringtones to mobile phones, may be invalid.

In two decisions that form part of the unprecedented “copyright pentalogy” of copyright tariff appeals heard by the top court last year, the Supreme Court considered whether a download of a recording of a musical work, either on its own or when incorporated into a video game, constituted a “communication to the public by telecommunication,” such that a download could attract a distinct copyright royalty, in addition to the royalty payable to the copyright holder for the reproduction of the work on the buyer’s computer or device. 

In overturning decisions of the Federal Court of Appeal, which had upheld decisions of the Copyright Board, a five Justice majority found that using the internet to transmit to a buyer a permanent reproduction of a work did not amount to a “communication” under the statute.

Among other rights, the Copyright Act grants rights holders both the sole right to reproduce and authorize the reproduction of their works, as well as the right to communicate their works to the public by telecommunication and to authorize such communication. Under these provisions, the Copyright Board of Canada had approved tariffs requiring royalty payments to the Society of Authors, Composers and Music Publishers of Canada (SOCAN) for the communication of downloads of recordings of musical works and for the communication of downloads of recordings of musical works incorporated into video games; as well as a separate tariff, payable to different copyright collective societies, for the reproduction of musical works in permanent downloads, limited downloads and on-demand streams of music transmitted over the internet. Royalties for the reproduction of musical works incorporated into games are individually negotiated with rights holders.

In the view of objectors to the SOCAN tariff at issue, the tariff amounted to “double dipping” in that both a communication royalty and a reproduction royalty arose from the same act or transaction (the downloading of a work), whereas only the reproduction royalty was payable with respect to a tangible copy of the work (such a CD or game cartridge) in a retail store.

In Entertainment Software Association v. SOCAN, which considered the application of the “communication by telecommunication” right to downloads of video games incorporating musical works, the majority of the court found that the Act must be interpreted in light of the principle of technological neutrality, avoiding the imposition of additional layers of protections and fees based solely on the method of delivery of the work to the end user. In this regard, the majority found that the internet was simply an alternative form of delivery. The majority also found that the legislative history of the Act demonstrated that the right to “communicate” was connected to the right to perform a work, not to the right to reproduce permanent copies of the work, and that the performance right did not contemplate the delivery of permanent copies of the work.

ICANN publishes applications for new generic top-level domain names

Justine Whitehead and Anne MacIsaac -

On June 13, 2012, the Internet Corporation for Assigned Names and Numbers (ICANN) published a list of the 1,930 applications for new generic Top-Level Domain Names (gTLDs) it had received during its recent January to May 2012 application period. The influx of applications was due to new rules approved in June 2011 by ICANN, the body which oversees the registration and coordination of the Internet’s system of unique domain names. The rules transform naming conventions for Internet Web sites by removing restrictions on allowable suffixes for domain names. Currently, Web site domain names end in either a country code (such as .ca or .uk) or in one of only twenty-two gTLDs, such as “.com” or “.org”.  Now organizations can apply to register any character string as a gTLD. This will allow companies to register their brands as gTLDs or to select other unique domain names for marketing purposes, drastically increasing the number of available domains. Applications were received from sixty countries, including sixty-six requests to register geographic names as gTLDs, and 116 requests for strings in non-Roman characters (called Internationalized Domain Names, or IDNs), such as Chinese, Arabic, and Cyrillic.

ICANN will consider a number of factors when reviewing the applications. For example, they will evaluate whether a proposed gTLD is confusingly similar to an existing gTLD, to a reserved character string or to another proposed gTLD; whether it is a geographic name requiring government support; and whether it contributes to domain name system (DNS) instability. They will also look at whether the applicant possesses adequate technical, operational and financial resources with respect to the registry services they will be required to provide.

As part of a public review process, the public will have an opportunity to comment on proposed gTLDs during the 60 days following the June 13 posting. Interested parties will also be able to file one of several types of objections during a formal seven month objection period. Bases for objection include: “string confusion”, where the proposed string is confusingly similar to that of an existing gTLD or to another application; “limited public interest”, where an application is contrary to generally accepted legal norms of morality and public order; “community”, where there is substantial opposition among a significant proportion of the community targeted by the proposed gTLD; and “legal rights”, where rights-holders, such as owners of registered or common law trademarks, may oppose a gTLD which infringes on their legal rights. Trademark owners should review the list of proposed gTLDs to ensure that none infringe upon their trademark, and submit comments or file an objection if appropriate.

The new rules also mean that there is now a greater variety of domain name extensions which could be used in combination with trademarks in an infringing way, requiring continuing vigilance by trademark owners to protect their legal rights. To help address this concern, ICANN will operate a Trademark Clearinghouse - a centralized database where trademark owners can deposit their trademark information in order to support future infringement claims.  The Clearinghouse can also be used to support Sunrise claims, allowing mark holders to register domain names in a TLD before the name is available to the general public.  

While marketing opportunities exist for trademark owners who can afford to invest in the chance to register their marks as a new gTLDs, the resulting proliferation of new domain names will present challenges for others. To protect their marks, trademark owners should monitor applications for gTLDs, file objections when problems are identified, and register their trademarks with the Trademark Clearinghouse.

No liability for defamation for basic hyperlinks, says Supreme Court

David Elder and Lindsay Gwyer -

Bloggers, tweeters, webpage owners and other providers and hosts of internet content can breathe a little easier today following a decision of the Supreme Court of Canada that ruled that merely providing hyperlinks to defamatory content cannot make them liable for defamation.

That said, while the decision provides clear support from the highest court in the land for both free expression and the preservation of the nature and benefits of the internet as whole, it stops short of giving hyperlinkers a “Get Out of Jail Free” card for all uses and presentations of links to defamatory material. 

The much-anticipated decision in Crookes v. Newton, 2011 SCC 47concerned a defamation action grounded on the posting by a website operator of two simple hyperlinks to defamatory content located on other sites. The website operator refused to remove the links upon request by the plaintiff, and the plaintiff brought an action in defamation in British Columbia, where he was unsuccessful both at trialand at a subsequent appeal to the B.C. Court of Appeal. At issue before the Supreme Court was the question of whether a simple hyperlink reference to defamatory information could constitute a “publication,” a key element of the tort of libel.

The case had been very closely watched by the internet community, as a negative ruling had the potential to impose an unprecedented chilling effect on the way content is shared online, effectively subverting one of the fundamental underpinnings of the design of the World Wide Web.

While the majority acknowledged in their judgement that the internet is a potentially powerful vehicle for defamatory expression, they also explicitly recognized the indispensability of hyperlinks in facilitating access to online information, and ruled so as to preserve the ability of users to provide basic links to third party content without fearing that they will become legally responsible for that content. The majority likened simple hyperlinks (which merely reference the existence and location of content) to footnotes or references, noting that both are necessarily content-neutral, with the poster having no control over the content to which they refer, and that both require some act on the part of the reader before the content can be accessed.   This type of basic link, the Court ruled, does not amount to an expression of meaning and cannot possibly be a publication of defamatory material.

While the decision provides clear immunity for providing simple hyperlinks to defamatory content, the three separate judgements that underlie the decision (either concurring or concurring in the result) leave the door open to potential liability for hyperlinking in other ways and contexts. Moreover, the decision may have significant implications with respect to liability for hyperlinking other types of prohibited or unauthorized content

Beyond the scenario of simple hyperlinking, which the Court found will not attract liability, things get murkier. The majority appears to conclude that for those hyperlinking to third party content, only repetition of the defamatory statement in the link or associated text will attract liability; however, in joint concurring reasons, Chief Justice McLachlan and Justice Fish purported to “clarify” that, notwithstanding the apparent bright line test set out in the majority judgement, defamation would also be possible where the text indicates adoption or endorsement of the hyperlinked content, even if it doesn’t repeat the defamatory statement. In a separate judgement that concurred in the result, Justice Deschamps favoured a more nuanced approach, where content posters would attract liability for defamation if they deliberately make the defamatory information readily available to a third party in a comprehensible form (although the defence of innocent dissemination may still be available). In light of these varying approaches, it will be interesting to see how Canadian courts may deal with hyperlinking liability issues on different facts and in different contexts.

The majority also noted that, in an era of rapidly evolving technologies, it may become necessary to consider in the future the liability that could be attracted by other types of links, which are or may become available, such as embedded or automatic links. (The facts before the Court involved one “shallow” link to a site’s homepage and one “deep” link to a specific page further down in the site’s hierarchy of content).

Finally, while the Crookes decision dealt exclusively with publication in the context of defamation, it may have broader implications for liability for hyperlinking to other types of prohibited or unauthorized content. For example, some commentators have argued that the Court’s interpretation of publication may have implications for the meaning of “publication” or “reproduction” under the Copyright Act.  

The approach could also conceivably raise implications for criminal liability. For example, the offence of public incitement of hatred focuses on the act of “communicating statements” in a public place.Bill C-51, introduced in the last session or Parliament, but yet to be reintroduced, following the spring election, included a provision that would have amended the offence to indicate that “communicating” would include “making available,” which, as pointed out by the accompanying Legislative Summary, would include providing a hyperlink to the offending material.

Although the Crookes ruling is an important victory for content posters and internet supporters generally, there are still many aspects of the legal implications of linking to unauthorized or illegal content that remain to be definitively settled in Canadian law.