The Volokh Conspiracy
Mostly law professors | Sometimes contrarian | Often libertarian | Always independent
The Court of Appeal for British Columbia has recently issued the latest in a long-and-growing-longer list of judicial cases attempting to apply local legal principles extraterritorially—in this case, to conduct by a non-party taking place anywhere on the globe.
Here are the basic facts. A BC corporation, Equustek Solutions, Inc., filed suit against Datalink Technologies, Inc., alleging that Datalink (also based in BC, and a former distributor of network interface hardware manufactured by Equustek) was repackaging Equustek hardware and distributing it (by means primarily of sales conducted over the Internet) under the Datalink name. A fairly straightforward trademark infringement claim of "passing off." The court agreed with the plaintiff, and ordered the defendants to cease referencing the plaintiffs' products on their websites, to publish a notice on their websites redirecting the plaintiffs' customers to the plaintiffs, and to cease all further infringing distributions.
"The defendants did not comply with the orders. Within a year of the lawsuit having been commenced, the defendants ceased to respond to communications in the litigation….
The defendants have changed their business operations since the lawsuit was commenced. They no longer operate from Vancouver. They offer their product for sale through a number of websites that they appear to control. They fill orders from unknown locations, apparently outside Canada. Although we are advised that the plaintiffs have made some efforts to determine where the defendants manufacture and warehouse their product, and to determine where the product is shipped from, they have not been successful. It appears that the locations have changed from time to time. The chambers judge described them as a "virtual company."
It gets more interesting (and much less straightforward) because Equustek then applied to the court for an injunction ordering Google—which was not a party to the underlying case, and which has not been charged with having done anything wrong—to remove all links to Datalink websites from all searches conducted worldwide. Astonishingly enough, the trial judge granted the request and issued the order, and, more astonishingly, it was just affirmed by the appeals court.
There is so much that is problematic about the courts' action here that one hardly knows where to begin. [Mike Masnick, over on Techdirt, has some trenchant observations about the case]. To begin with, are Canadian courts really in the habit of issuing these "ancillary" injunctions against innocent third parties who are engaging in otherwise lawful conduct?
But the real problem, of course, lies with the courts' attempt to control, by application of its view of the law, the content that appears on websites operated by a US corporation outside the boundaries of the court's lawful jurisdiction. [Google actually offered to remove offending sites from searches that were viewable at Google.ca, but the plaintiffs were not satisfied with that outcome].
This comes on the heels of a ruling by the French Privacy Office that Google must implement Europe's offensive and free-speech-violative "right to be forgotten" throughout all of Google's domains (and not just those targeted at particular countries, like Google.de or Google.fr) or face substantial financial penalties—thereby, in effect, enforcing the right to be forgotten as a new global legal norm.
Many years ago, Jack Goldsmith, Tim Wu, Joel Reidenberg, and other legal scholars told those of us who were deeply worried about this prospect of multiple, conflicting extraterritorial legal claims not to worry:
"A nation can purport to regulate activity that takes place anywhere. The Island of Tobago can enact a law that purports to bind the rights of the whole world. But the effective scope of this law depends on Tobago's ability to enforce it. And in general a nation can only enforce its laws against: (i) persons with a presence or assets in the nation's territory; (ii) persons over whom the nation can obtain personal jurisdiction and enforce a default judgment against abroad; or (iii) persons whom the nation can successfully extradite." (Goldsmith, "Against Cyberanarchy," 65 U. Chicago L. Rev. 1199 (1998)).
In other words, we needn't worry unduly about this possibility of multiple overlapping jurisdictions, because the "enforcement jurisdiction" limits the effective scope of each nation's laws.
There's some truth to it, to be sure. As the court acknowledged, Google "does not have a physical presence in British Columbia, [ that is] it does not have offices or resident staff here, and none of its servers are located in the Province"—so what is the court going to do to enforce its order if it turns out, say, that Google doesn't comply, and that persons accessing Google.com from within, say, the United Kingdom are able to access links to the offending Datalink sites? The court can't exactly march into Mountain View with the Canadian police at its side and seize any of Google's property—so there's nothing for Google really to worry about, as long as it stays out of British Columbia. BC—like the Island of Tobago—can purport to bind the whole world, but it is limited in its ability to carry that out.
But there's more, unfortunately, to this story than that. Assets, in the inter-connected world we live in, are awfully fluid things, and move around the globe easily and silently. Google may have no physical presence in BC—but I'm willing to bet that Citibank (or Chase, or …) does; and I'm willing to be that Google has money in accounts at one or more of those institutions; and the banks are surely subject to, and will have to comply with, any order from a BC court requiring them to close down, or transfer funds from, Google's account, even if that account was opened in California or Cleveland or Canterbury.
If you think that's far-fetched, recall what I said last week about the FIFA scandals, where the US prosecutors are asserting jurisdiction (criminal, in that case) over the extraterritorial activities of a Swiss corporation on the basis, apparently, of its bank accounts in the US:
As the Times story notes, "United States law gives the Justice Department wide authority to bring cases against foreign nationals living abroad, an authority that prosecutors have used repeatedly in international terrorism cases. Those cases can hinge on the slightest connection to the United States, like the use of an American bank or Internet service provider."
But ask yourself: if you think that the "use of an American bank" is a sufficient basis for the exercise of US jurisdiction over foreign nationals residing and conducting business abroad, then presumably you're OK with being hauled into court in Singapore because you have used, say, a bank operating in Singapore, or into a Mexican court because your money found its way to a Mexican mortgage broker, or into a Danish court because you have at times used a Danish Internet Service Provider. Yes?
It's a helluva way to run an international legal order.