By Lisa Shuchman, From Corporate Counsel

A court in British Columbia has ordered Google to remove links to a site—globally.

It’s been almost 20 years since John Perry Barlow, the essayist, Grateful Dead lyricist and Electronic Frontier Foundation founder, declared that governments have no sovereignty in cyberspace. “Your legal concepts of property, expression, identity, movement and context do not apply to us,” he wrote in his “Declaration of Independence of Cyberspace,” which went viral when published in 1996. “They are all based on matter, and there is no matter here.”

The courts in the Canadian province of British Columbia beg to differ.

A recent ruling by the Court of Appeal for British Columbia affirmed a lower court decision ordering Google Inc. to block certain websites from its search engine—not just in British Columbia but worldwide.

The ruling, the first of its kind in Canada, raises questions about the power that courts can wield over the Internet—a question that is also being raised in other parts of the world. It challenges notions of free speech, extraterritoriality and an open Internet. And it raises the possibility that intellectual property owners will file more lawsuits in British Columbia as it develops a reputation as a venue willing to exercise its authority beyond its provincial borders.

“This touches off a troubling jurisdictional tangle,” says David Post, a fellow at the Institute for Information Law and Policy at New York Law School and a former professor at Temple University’s Beasley School of Law. “Different countries have different laws, and issuing global injunctions does not make for a sensible international order.”

The seemingly unconventional ruling stems from a conventional intellectual property dispute between rival companies. Equustek Solutions Inc., a network equipment manufacturer, alleged that Datalink Technologies Inc. was taking Equustek hardware, repackaging it and then distributing it as its own brand. It sued Datalink in Vancouver for trademark infringement and unlawful appropriation of trade secrets.

The court agreed with Equustek and ordered Vancouver-based Datalink to stop selling the infringing products on its websites. It also ordered Datalink to publish a notice on its sites redirecting customers to Equustek.

Datalink ignored the injunctions. In fact, it stopped responding to the court and moved its operations. It ran websites from unknown locations and continued to sell the infringing products under different names. It relied on Web search engines to direct customers to its sites. For Equustek, stopping Datalink with court orders became a futile attempt at whack-a-mole.

But Equustek wasn’t giving up. If customers were finding Datalink sites via a search engine, it reasoned, why not go after the world’s biggest search engine? Equustek asked the court to issue an injunction prohibiting Google from delivering search results pointing to Datalink’s websites across the globe.

Google was not a party to the litigation and had not been charged with any wrongdoing in the case. But once dragged into the fight, it voluntarily delisted 345 specific URLs from the google.ca domain that directed users to the infringing products. That search engine is used by approximately 95 percent of Canada’s residents.

But the court stated that that wasn’t enough. It granted the requested injunction, ordering Google to delist the sites worldwide. This meant that the offending sites would have to be removed not only from google.ca, but also from google.co.uk, google.fr, google.co.jp and hundreds of other country-specific search engine domains owned by the company. And it would, of course, also have to be delisted from google.com.

Not surprisingly, Google appealed. It stated that the injunction went beyond the jurisdiction of the court. It also argued that it improperly operated against an innocent nonparty to the litigation and had an impermissible extraterritorial reach.

But in June, the Court of Appeal for British Columbia affirmed the lower court’s decision—a loss that observers say has repercussions not only for Google but also for the entire Internet.

“It’s a slippery slope,” says Post. “Are more countries going to feel empowered to issue worldwide injunctions against Google and other search engines? Will they mandate global online censorship?”

While countries do at times make extraterritorial legal claims, they usually can’t enforce them unless the person or company has a presence or assets in that country. Google argued to the court that because it had no physical operations and no employees in British Columbia, it could not be subject to an injunction issued by the province’s courts. The judges, however, disagreed, saying that Google gathers data in British Columbia and sells advertising to users and companies in the province.

“The ramifications of this logic are huge,” says Vera Renieri, a staff attorney at the Electronic Frontier Foundation, which submitted a brief as an intervenor on behalf of Google. “Based on the court’s reasoning, there is no place on earth that Google would not be subject to a jurisdiction.”

Google also argued that courts cannot exercise authority over its international operations using their domestic laws—that to do so would lead to restrictive and conflicting orders. But the court again denied culpability, saying that if issues arise, it is because Google operates globally and not because there is a problem with the law.

“Google raises the specter of it being subjected to restrictive orders from courts in all parts of the world, each concerned with its own domestic law,” Justice Harvey Groberman wrote for the appellate panel. “I agree with the chambers judge that it is the worldwide nature of Google’s business and not any defect in the law that gives rise to that possibility.”

To be sure, the idealized view of cyberspace that Barlow wrote about 20 years ago at the World Economic Forum in Davos has not existed for a long time. Countries increasingly demand that search engines remove sites for various reasons. Under the Digital Millennium Copyright Act in the United States, search engines can be ordered to take down infringing content. In France, Yahoo Inc. was sued for displaying Nazi artifacts on its auction site because displaying Nazi paraphernalia is against French law. Yahoo, which had operations in France that could be shut down if it didn’t comply, agreed to ban the sale of Nazi items there.

But legal scholars are seeing what they consider an alarming trend—that more and more courts across the globe feel emboldened to issue extraterritorial orders. The European Court of Justice, for example, has ruled that search engines such as Google can be forced to take down links in all of Europe if individuals believe they infringe their privacy rights, even if the information is factual and in the public record. More recently, regulators in France have ruled that under the “Right to Be Forgotten” law, Google, upon request, must remove links to certain sites worldwide.

“The idea that courts issue orders with extraterritorial jurisdiction is not new,” says Richard Stobbe, an attorney at Field Law in Calgary and the editor of ipblog.ca, a blog that focuses on intellectual property, copyright, trademarks and Internet law in Canada. “But this is a first for Canada, and you have to wonder where it will lead.”

EFF’s Renieri believes that when other countries see Canada exercise extraterritorial legal claims, they will follow. “The most restrictive laws will become de facto law,” she says. “It will become a race to the bottom.”

Some attorneys predict that when lawyers go forum shopping, they will increasingly consider British Columbia as a place to file infringement suits. “Rights holders will definitely take a second look at British Columbia, which could become popular much like the Eastern District of Texas, says Stobbe. “Lawyers may rush to British Columbia, knowing that if they can win on the merits, they can seek an injunction against Google.”

To be sure, many may consider this prospect far-fetched. But consider this: The International Federation of Film Producers Associations and the International Federation of the Phonographic Industry—groups that represent the global film and television production and music recording industries and are extremely concerned about online infringement—were intervenors in the British Columbia case. They argued that the court’s order against nonparty Google was legal and correct.

While the Canada case deals with IP theft and infringement, Roger McCon­chie, an attorney who specializes in defamation, privacy, media, trade libel and Internet law at his Vancouver-based firm, McConchie Law, says the ruling could have a direct bearing on freedom of speech and the Internet. People who believe they’ve been defamed, for example, could seek out a worldwide injunction against search engines in British Columbia’s courts, he says.

And it doesn’t stop there. “What happens if a Russian court orders Google to remove gay and lesbian sites from its database? Or if Iran orders it remove Israeli sites?” Michael Geist, a law professor at the University of Ottawa who specializes in Internet law, wrote in a blog post about the case. “The possibilities are endless, since local rules of freedom of expression often differ.”

The judges in British Columbia were not blind to these concerns. “Courts should be very cautious in making orders that might place limits on expression in another country,” Groberman wrote in the appellate opinion. “Where there is a realistic possibility that an order with extraterritorial effect may offend another state’s core values, the order should not be made.”

It is unclear whether that caveat goes far enough. Google says it is reviewing the judgment carefully and has not yet made a decision about whether to pursue an appeal to the Supreme Court of Canada. “If it does, I’d expect that our Supreme Court will hear it,” says McCon­chie. “And it will be closely watched.”

For more on this story go to: http://www.corpcounsel.com/id=1202731739756/Canada-Gives-Google-a-World-Wide-Headache#ixzz3h6NswyqX