In a 7-2 decision, the court agreed a British Columbia judge had the power to issue an injunction forcing Google to scrub search results about pirated products not just in Canada, but everywhere else in the world too.
Those siding with Google, including civil liberties groups, had warned that allowing the injunction would harm free speech, setting a precedent to let any judge anywhere order a global ban on what appears on search engines. The Canadian Supreme Court, however, downplayed this objection and called Google's fears "theoretical."
"This is not an order to remove speech that, on its face, engages freedom of expression values, it is an order to de-index websites that are in violation of several court orders. We have not, to date, accepted that freedom of expression requires the facilitation of the unlawful sale of goods," wrote Judge Rosalie Abella.
The facts of the case involved Equustek Solutions, a maker of industrial networking gear that sought to stop a rival misusing its trademarks online. In the process, Equustek sought—and won—an injunction forcing Google to remove search results for the rival not just in Canada, but also worldwide.
In explaining its decision, the Canadian Supreme Court emphasized that its order was only a temporary injunction, and that the worldwide order could be set aside once the underlying intellectual property dispute had been sorted out.
The dissenting judges, however, said the idea of further court proceedings was "a fiction" and that Equustek would just sit on the temporary order, effectively making it a permanent one. The judges also pointed that Google was not a direct party to the dispute, which meant the situation called for "judicial restraint" rather than subjecting the company to a worldwide order.
The Canadian ruling comes at a time when some courts in Europe have ruled that Google must remove search results worldwide under so-called "right to be forgotten" laws.
In response to a request for comment about the Supreme Court ruling, a Google spokesperson told Fortune, "We are carefully reviewing the Court’s findings and evaluating our next steps."
Meanwhile, the tech industry has reacted with alarm, warning the Canadian Supreme Court could lead to a new wave of global censorship.
The Canadian ruling also illustrates the delicate balance U.S. tech giants face in trying to preserve free speech principles while also obeying the particular laws of individual countries, such as anti-hate laws in Germany or blasphemy laws in Thailand. For the most part, the companies have addressed the issue through so-called geo-fencing or by developing versions of their website tailored to each country—such as Google.ca, which is where Google had argued the injunction in Equustek should only have applied.
But recently, courts have become more emboldened to extend the national reach of those laws, triggering fears that citizens in one country will effectively be subject to the rules of others:
Some groups, however, applauded the ruling. A spokesperson for Music Canada, which represents major recording labels, said in a statement that the new worldwide injunction will be a "vital remedy to address illegal online activities and enforce the rights of creators.”
Wednesday's ruling also comes a week after the Canadian Supreme Court dealt a big setback to another U.S. tech giant, Facebook. In the earlier ruling, the court said the social network could not invoke its terms of service to force a Canadian citizen to bring a privacy lawsuit in California rather than Canada.
This story was update several times to add additional details.