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Date: 2000-01-23

DVD-Lobby gewinnt auch in Fall 2

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Die ausständige Entscheidung aus Santa Clara ist jetzt da -
die News sind keine guten. Judge Elfving hat der Klage auf
einstweilige Verfügung stattgegeben: Das Programm DeCSS,
das den Kopierschutz von DVDs unwirksam macht, zu
hosten ist auf US-Websites vorerst illegal [siehe unten].

Dafüpr kommen jetzt Audio-CDs mit Kopierschutz [URL
below] auf den Markt. Das in den meisten Jurisdiktionen
jahrzehntelang geltende Recht des Konsumenten, pro legal
erworbenem Stück Content auf Video, LPs, CDs, Musik-
Kassetten eine Kopie für den eigenen Gebrauch anzufertigen,
stirbt damit langsam aus.

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Case No. CV 786804


The above-entitled matter came on for hearing before the Honorable William J. Elfving on January 18, 2000 at 1:30 p.m. in Department 2. The matter having been taken under submission, the Court orders as follows:

The Plaintiff's Motion for Preliminary Injunction is GRANTED in part as follows:

The named Defendants, their officers, directors, principals, agents, servants, employees, attorneys, successors and assigns, representatives and all persons acting in concert with them, are hereby enjoined from: Posting o
r otherwise disclosing or distributing, on their websites or elsewhere, the DeCSS program, the master keys or algorithms of the Content Scrambling system ("CSS"), or any other information derived from this proprietary inf

Plaintiff, DVD Copy Control Association, is the sole licencing entity which grants licenses to the CSS technology in the DVD format. CSS, "Content Scrambling System," is an encryption system developed by Plaintiff's pred
ecessor in interest in order to protect the copyrighted materials stored on DVDs. The alleged misappropriation of the CSS algorithm and master keys is the subject of this action and the instant Motion for Preliminary Inj

The evidence is fairly clear and undisputed that the original postings of DeCSS, a program which allegedly embodies, uses and/or is a substantial derivation of CSS, to the Internet occurred on October 6 and then on Octobe
r 25, 1999. Plaintiff's evidence shows that the Motion Picture Association immediately began an investigation and sent cease and desist letters on November 18, 1999. Some individuals and entities such as CNET's download
.com removed the alleged trade secret materials; other did not. Thereafter, on December 27, 1999 Plaintiff filed this lawsuit seeking the limited remedy of injunctive relief for misappropriation of its trade secret. The
Court denied Plaintiff's very broad request for a Temporary Restraining Order, and the parties proceeded to submit extensive argument and evidence for the Court's consideration. In the course of these proceeding, Plaint
iff narrowed the scope of the injunction which they seek to only prohibit Defendants from posting and/or knowingly linking to any websites which post the trade secret and/or its derivatives.

In order to prevail on their Motion for Preliminary Injunction in a misappropriation of trade secret case, the Plaintiff must show that they are likely to prevail on the merits, and that the burden of harm weighs in their
favor. (See Generally Witkin, Cal. Procedure, 4th ed., Provisional Remedies, IV Injunctions, §296) "A preliminary injunction may be properly issued whenever the questions of law or fact are grave and difficult, and injur
y to the moving party will be immediate, certain, and great if it is denied, while the loss to the opposing party will be trivial if it is granted. Wilms v. Hand (1951) 101 Cal.App.2d 811, 815

In order to prevail on the merits, Plaintiff must establish that they had a trade secret which was misappropriated. The Plaintiff has shown that the CSS is a piece of proprietary information which derived its independent
economic value from not being generally known to the public and that Plaintiff made reasonable efforts under the circumstances to maintain its secrecy. Although Defendants argue extensively that a 40 bit encryption syst
em is weak at best, it is undisputed that the encryption remained a secret for close to three years and was limited in its strength by certain international export regulations. Under the law, a system to protect secrecy
does not become unreasonable simply because a clever thief finds a way to penetrate the security. (E.L. du Pont de Nemours & Co., inc. v. Christopher, (CA5, 1970) 431 F.2d 1012) Under these circumstances, the Court is sa
tisfied that Plaintiff has shown a likelihood of prevailing on the issue of trade secret.

Plaintiff must also show that the trade secret was misappropriated, or that the trade secret was obtained through improper means and that the Defendants knew or should have know that the trade secret was obtained through
improper means when they posted it or its derivative to the Internet. (Civil Code §3426.1(b)) Although the parties dispute the who and how, the evidence is fairly clear that the trade secret was obtained through reverse e
ngineering. The Legislative comment to the Uniform Trade Secrets Act states, "Discovery by "reverse engineering," that is, by starting with the known product and working backward to find the method by which it was develo
ped," is considered proper means. The only way in which the reverse engineering could be considered "improper means" herein would be if whoever did the reverse engineering was subject to the click licence agreement which
preconditioned installation of DVD software or hardware, and prohibited reverse engineering. Plaintiff's case is problematic at this pre-discovery stage. Clearly they have no direct evidence at this point that Mr. Jon
Johansen did the reverse engineering, and that he did so after clicking on any licence agreement. However, in trade secret cases, it is a rare occasion when the Plaintiff has a video of an employee walking out with trade
secret, or an admission of a competitor that they used improper means to obtain Plaintiff's intellectual property. In most situations, Defendants try to cover their tracks with considerably more effort than the Defendan
ts did herein. The circumstantial evidence, available mostly due to the various defendants' inclination to boast about their disrespect for the law, is quite compelling on both the issue of Mr. Johansen's improper means
and that Defendants' knowledge of impropriety.

Defendants make the additional argument that even if Johansen clicked on the license agreement, such an agreement contravenes Norwegian law. This Court is not well positioned to interpret Norwegian Law, and Defendant's o
wn expert, even if this Court could consider expert testimony
on question of legal interpretation,1 states that the issue has
not been conclusively decided in Norway. Defendants have
not sufficiently supported their argument that the licence
agreement, like the one at issue here, would be disallowed
by Norwegian Law, although they may at some point be able
to do so.

Most compelling in this matter is the relative harm to the
parties. At this point in the proceeding, the harm to the
Defendants is truly minimal. They will simply have to remove
the trade secret information from their web sites. They may
still continue to discuss and debate the subject as they have
in the past in both educational, scientific, philosophical and
political context. Defendants have not provided any evidence
of any economic harm which an injunction could currently
cause, although if such an injunction were not granted it is
quite possible that this could change which could potentially
shift the burden of harm in Defendants' favor.
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published on: 2000-01-23
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