With implications for US websites, two recent controversial Supreme Court of Canada decisions indicate that Canadian courts may be more aggressively asserting jurisdiction in disputes arising on the internet. In Douez v. Facebook, Inc., 2017 SCC 33 (June 23, 2017), the Court declined to enforce a choice of forum clause in Facebook’s terms of use and permitted a privacy lawsuit to proceed in British Columbia. In Google Inc. v. Equustek Solutions Inc., 2017 SCC 34 (June 28, 2017), the Court granted an injunction that extended beyond Canadian borders, prohibiting Google from displaying certain infringing material.
In Douez, Facebook allegedly used the plaintiff’s name and likeness without consent in the “Sponsored Stories” ad feature, which showed a user’s Facebook “friends” how the user interacted with a sponsored page, app or event. The plaintiff sought certification of a class action suit in British Columbia. Facebook moved to stay the plaintiff’s motion based on the California forum selection clause in its online terms of use. In a split decision (4-3), the majority ruled that the action should proceed in British Columbia. Three of the four judges declined to enforce the forum selection clause due to the importance of the “quasi-constitutional privacy rights of British Columbians.” (¶ 50) The fourth judge found the forum selection clause unconscionable and a violation of public policy, noting “clauses that have the effect of impairing a consumer’s access to potential remedies”(¶ 99) in online contracts should be highly scrutinized.
Five days later, in Google, the Court described the “borderless’ nature of the internet,”(¶ 41) and upheld a world-wide injunction (not just for google.ca pages, as Google requested) prohibiting Google from displaying entire domains and websites that sold products allegedly infringing intellectual property rights. In a 5-2 decision, the Court held the worldwide injunction was the only way to effectively mitigate the harm to Equustek pending trial and caused minimal harm to Google.
Canadian plaintiffs and regulators may use these cases to try to strike or modify forum selection clauses, and possibly other clauses in online terms or “click-wrap” agreements, such as liability caps, waivers and disclaimers. Organizations may want to consider additional strategies to reduce risk.
UPDATE: As of July 24, 2017, Google has sought relief in the U.S. District Court for the N.D. California, alleging that this ruling violates U.S. law and thus the company does not need to comply with the Canadian decision.
If you have any questions, please call or email your existing contact at GTC Law Group or email [email protected].
Prepared by Laila Paszti under the supervision of GTC Member Sayoko Blodgett-Ford (CIPP/US). Laila is admitted to practice in New York and Ontario (Canada). Sayoko is admitted to practice in Massachusetts, the District of Columbia, Hawaii and the U.S. Patent & Trademark Office. This Update discusses certain legal and related developments and should not be relied upon as legal advice, or as legal guidance for particular circumstances. Readers are cautioned against making any decisions based on this material alone.