Reply Brief Of Appellant Bunner (CA; July 6, 2000)

FIRST AMENDMENT PROJECT JAMES R. WHEATON (Bar No. 115230)
DAVID GREENE (Bar No. 160107)
1736 Franklin Ave., 9th Floor
Oakland, CA 94612
Telephone: (510) 208-4555
Facsimile: (510) 208-4562

HUBER SAMUELSON APC
ALLONN E. LEVY (Bar No. 187251)
210 North Fourth Street, Suite 400
San Jose, CA 95112
Telephone: (408) 295-7034
Facsimile: (408) 295-5799

TOMLINSON ZISKO MOROSOLI & MASER LLP
THOMAS A. MOORE III (Bar No. 115107)
200 Page Mill Road, Second Floor
Palo Alto, CA 94306
Telephone: (650) 325-8666
Facsimile: (650) 324-1808

ELECTRONIC FRONTIER FOUNDATION
ROBIN D. GROSS (Bar No. 200701)
1550 Bryant Street, Suite 725
San Francisco, CA 94103
Telephone: (415) 436-9333
Facsimile: (415) 436-9993

Attorneys for Defendant/Appellant
ANDREW BUNNER

Andrew Bunner discovered information on the Internet that was publicly available to practically any Internet user in the world. He published this information on his website. DVD CCA has filed a lawsuit to prevent him from ever publishing it again in any medium. In its opposition, DVD CCA urges this court to adopt the extreme and unprecedented position that asserted trade secrets are exempt from the First Amendment, and that the Uniform Trade Secrets Act is exempt from constitutional scrutiny. Accordingly, defendant Bunner's free speech rights may be cast aside by the mere invocation of “trade secrets.” To bolster its position, DVD CCA argues that the First Amendment does not protect the right to publish, but only the rights to discuss, criticize and comment. Neither the California nor U.S. Constitutions, nor any of the case law relied upon by DVD CCA, support this remarkable interpretation of the law.

Under the legal regime proffered by DVD CCA, the proverbial cart is solidly placed before its horse. If the heavy evidentiary burden required by the First Amendment were not applied to the very question of whether there has been a misappropriation of trade secrets, then the constitutional protections could be cast aside by mere allegations.

Perhaps in recognition of the weakness of its asserted position, DVD CCA attempts to characterize this appeal as being about theft and piracy. However, DVD CCA has never alleged or offered any evidence that Bunner stole or illegally copied or sold anything. And the preliminary injunction that is the subject of this appeal does not prohibit the copying or distribution of DVD movies.

This appeal is not about theft or piracy. Rather, it is about the trial court's failure to apply the evidentiary burden that the First Amendment requires, and its failure to perceive the constitutional harm that Bunner, and the general public, suffers because of the restriction on his fundamental rights.

Bunner's right to publish on his website information that he legally and innocently obtained is protected by the First Amendment and the even more rigorous precepts of the California Constitution. The trial court's failure to employ the appropriate First Amendment tests evidences a manifest abuse of discretion.^¹ Moreover, it is clear that had the First Amendment guidelines been followed, the preliminary injunction could not have been granted.

The preliminary injunction restricting Bunner's fundamental constitutional rights must be vacated.

I. THE FIRST AMENDMENT IS IMPLICATED BY THE RESTRICTION ON THE RIGHT TO PUBLISH EVEN IF TRADE SECRETS ARE ALLEGED.

DVD CCA's entire opposition rests on the assertion that the First Amendment is not implicated in any way by the preliminary injunction that bars Bunner from publishing DeCSS on his website. DVD CCA does not contend that intermediate scrutiny or some other First Amendment test applies. It does not contend that its request for a preliminary injunction would survive prior restraint or some other First Amendment analysis.

It urges this Court to adopt the rule, in effect, that asserted, yet unidentified,^² trade secrets are simply exempt from the First Amendment.

To make its unprecedented position seem more acceptable, DVD CCA lines up a parade of “theft and piracy” straw men:

Yet despite this abundance of theft and piracy rhetoric, DVD CCA ultimately admits that this case is about Bunner's disclosure of information, “not whether Bunner himself utilizes the trade secrets in order to pirate DVDs.” [Resp. Mem. at 31 n.13]

Bunner does not disagree that the courts may enjoin theft and piracy of copyrighted motion pictures. However, that is not an issue that is before this Court on this appeal.

DVD CCA's blanket assertion that trade secrets are exempt from the First Amendment finds no support in the law. Indeed, such a contention has been repeatedly rejected.^³

In CBS Inc. v. Davis, 510 U.S. 1315, 1316-18 (1994), Circuit Justice Blackmun overturned a preliminary injunction issued under the South Dakota Uniform Trade Secrets Act against the broadcasting of a news report that would reveal “confidential and proprietary practices and processes.” The court below had held that First Amendment doctrine was inapplicable. Justice Blackmun disagreed and, applying strict scrutiny, struck down the injunction as an improper prior restraint, despite the possibility that the information was obtained by criminal means. Id.

The Second Circuit has explicitly rejected the contention that “trade secrets are a special category of information to which the First Amendment does not apply.” Bridge C.A.T. Scan Associates v. Technicare Corp., 710 F.2d 940, 943 (2d Cir. 1983). The court held that “[t]he fact that the order at issue here involves trade secrets does not diminish the precedential effect” of cases applying the prior restraint doctrine.^⁴ Id. at 945-46.

The Oregon Supreme Court has similarly rejected “the existence of a historical exception for the prior-restraint protection of trade secrets from publication by a third party publisher^⁵ who receives information lawfully.” Oregon ex rel Sports Management News v. Nachtigal, 921 P.2d 1304, 1308-09 (Ore. 1996). In that case, the Oregon Supreme Court struck down a provision in the Oregon Uniform Trade Secrets Act that authorized orders preventing persons from disclosing alleged trade secrets, relief it characterized as “instantly recognizable as a classic ‘prior restraint.'” Id. at 1308.^⁶ “The speech that [the statute] restricts is, of course, constitutionally protected expression.” Id.

Similarly, as discussed in Bunner's Opening Brief, the First Amendment and the prior restraint doctrine have been invoked to strike down the authorization of an injunction against the publication of trade secrets in the Michigan Uniform Trade Secret Act as applied to one not bound by a duty of confidentiality or some other fiduciary duty. Ford Motor Co. v. Lane, 67 F.Supp.2d 745, 750 (E.D. Mich. 1999). See also Religious Technology Center v. Lerma, 897 F.Supp. 260, 263 (E.D. Va. 1995) (characterizing the requested injunction against the Washington Post as a prior restraint). See generally Mark A. Lemley & Eugene Volokh, Freedom of Speech and Injunctions in Intellectual Property Cases, 48 Duke L.J. 147, 231(1998) (noting that because of the applicability of the First Amendment, “courts can't order newspapers not to publish materials, whether the Pentagon Papers or the formula for Coca-Cola, even if the materials were leaked by someone (such as Daniel Ellsberg) who had a duty to keep them private”).

The exemption from the First Amendment that DVD CCA seeks for trade secrets is especially unwarranted in this situation because the trial court made no finding that DeCSS contains or was derived from DVD CCA's trade secrets.^⁷ As DVD CCA concedes, the trial court found only that DeCSS “allegedly embodies, uses and/or is a substantial derivation of CSS.”^⁸ (emphasis added). [AA 712]

DVD CCA thus asks this Court to adopt the extreme position that merely by alleging the existence of trade secrets, the First Amendment becomes irrelevant. Such a policy would clearly eviscerate the constitutional safeguards that insure that the freedom of speech is not carelessly tossed aside. Indeed, as set out in Bunner's Opening Brief, one of the chief safeguards in this context is the enhanced evidentiary burden regarding the existence and misappropriation of trade secrets. If that burden does not apply to proof of the trade secrets and the misappropriation themselves, then the First Amendment would be toothless.

DVD CCA contends that “the USTA would be rendered worthless” if courts “were required to engage in a prior restraint analysis every time a plaintiff sought to enjoin the disclosure of misappropriated trade secrets.” [Resp. Mem. at 21] Bunner concedes that the First Amendment can sometimes be inconvenient, or even burdensome, for those seeking to restrain another's right to speak or publish. Yet, the First Amendment does not render the UTSA meaningless. It only ensures that it is applied fairly and constitutionally.^⁹

DVD CCA repeatedly asserts that Bunner's only First Amendment interest lies solely in “discussing, commenting, or criticizing.” However, it is beyond dispute that the right to publish information is independent of the rights to discuss, comment upon, or criticize the subject matter of that information. See Nebraska Press Ass'n v. Stuart, 427 U.S. 539, 556 (1976) (discussing “prior restraints on speech and publication”) (emphasis added). Notably, DVD CCA cites no authority to support its position that as long as the rights to comment and discuss are preserved, the right to publish may be ignored.^¹⁰

Even courts that have ultimately granted injunctions have subjected the request to an enhanced level of scrutiny. For example, in Garth v. Staktek Corp., 876 S.W.2d 545, 549-50 (Tex.App. 1994), relied on by DVD CCA, the court applied prior restraint analysis to the requested injunction against the use of trade secrets.^¹¹ The court acknowledged the rule authorizing injunctions against the use of trade secrets in breach of a duty of confidentiality. “However, the application of this rule must still be constitutional. . . . [W]e need determine whether this form of prior restriction on free speech is permitted.” Id. at 549. The court then applied strict scrutiny, requiring that the plaintiff show irreparable and immediate harm and that no less restrictive alternatives were available. Id. at 550. See also Markel v. J.L. & Associates, 938 S.W.2d 74, 80 (Tex. App. 1996) (applying Garth to reject a request for a preliminary injunction).^¹²

Not a single case relied on by DVD CCA in its opposition stands for its extraordinary proposition that the First Amendment need not be considered at all in the situation before this Court.

As set forth in Bunner's Opening Brief, the preliminary injunction entered against Bunner is a restriction on pure speech, that is speech un- intertwined with conduct. This is a crucial distinction from all of the authority cited by DVD CCA, in which the primary effect of the injunction was to enforce an express or implied confidentiality agreement or to prohibit unfair competition. The restrictions on speech were incidental. See, e.g., Cherne Indus. v. Grounds & Assoc., 278 N.W.2d 81, 94 (Minn. 1979) (basing its holding on a breach of contract and duty theory and noting that any incidental infringement of First Amendment rights would be tolerable).

Moreover, all of these cases arise against former employees or business partners, or in closely analogous situations.^¹³

That an injunction would issue to enforce an independent duty but not to bar pure speech is completely consistent with California trade secrets law. “The protection which is extended to trade secrets fundamentally rests upon the theory that they are improperly acquired by a defendant, usually through theft or a breach of confidence.” Vacco Indus. v. Van Den Berg, 5 Cal.App.4th 34, 50 (1992) (citing 11 Witkin, Summary of California Law, Equity §§103-105, at 784-87 (9^th ed. 1990)).

In this case, DVD CCA does not seek to enforce any contract or fiduciary duty that Bunner holds to it. It seeks simply to prevent him from publishing information that was available to any Internet user precisely because of the content of his publication.

Despite Bunner's invitation in his opening brief to identify one, DVD CCA does not cite a single case where an injunction has been issued against a third party publisher like Bunner or one that is a restriction on pure speech.^¹⁴ Like its previous authority, the only third party cases cited by DVD CCA cast in the third party role the new employers of the former employees. See PMC, Inc. v. Kadisha, 78 Cal.App.4th 1368 (2000) (analyzing directors and officers liability under agency law when they acquired company after it been sued for misappropriation of trade secrets); Computer Assoc. Int'l v. Altai, Inc., 982 F.2d 693 (2d Cir. 1992) (holding that a state law trade secret action was not preempted by federal copyright law because of existence of an independent action for breach of duty arising from employment ); C&F Packing Co. v. IBP, Inc., No. 93-C1601, 1998 WL 1147139 (N.D. Ill., March 16, 1998) (finding hiring of plaintiff's former employee to be one of several business factors supporting the existence of a duty of confidentiality); Data Gen. Corp. v. Grumman Sys. Support Corp., 825 F.Supp. 340 (D. Mass. 1993). As a breach of a former employee's duty of confidentiality to its former employer may be presumed when the new employment will inevitably lead the employee to rely on or use its former employer's trade secrets, see Pepsico v. Quaker Oats Co., 54 F.3d 1262, 1269 (7^th Cir. 1995), these cases are analytically indistinguishable from the ones involving former employees directly. Moreover, these cases addressed the propriety of liability for damages not injunctive relief. By definition, prior restraint analysis is not applied to determinations of post-publication liability.

Furthermore, many of the cases relied on by DVD CCA involve restrictions not on publication of trade secrets, but on use of them. For example, Federal Election Commission v. International Funding Institute, 969 F.2d 1110 (D.C. Cir. 1992), dealt with a injunction on the commercial use of, in that case the sale of and solicitation with, proprietary information. The mere publication of the information was not prohibited. Id. at 1113. Nevertheless, the court subjected the restriction to intermediate scrutiny to ensure consistency with the First Amendment. Id. at 1116. In MAI Systems Corp. v. Peak Computer, 991 F.2d 511, 521-22 (9th Cir. 1993), the court, distinguishing between use and mere dissemination, invalidated a permanent injunction because it had not been proven that the trade secrets had actually been used to solicit the former employer's customers.^¹⁵

Universal City Studios v. Reimerdes, 82 F.Supp.2d 211 (S.D.N.Y. 2000), the CSS litigation under the Digital Millennium Copyright Act, is another such case.^¹⁶ There, the court based its holding on its belief that DeCSS is only incidentally expressive, id. at 226,^¹⁷ and sought to enjoin the use of DeCSS for improper copying and distribution of DVD movies. Id. at 223. As stated above, DVD CCA has not alleged, and has offered no evidence to suggest, that Bunner has or intends to copy or pirate copyrighted material.^¹⁸

DVD CCA contends that “many courts have recognized that a corporation's interest in protecting its trade secrets overrides an asserted First Amendment interest.” However, the cases DVD CCA cites do not support that broad assertion. Rather, they all deal with requests to unseal litigation transcripts and documents. The First Amendment right at issue, if any,^¹⁹ was not the right to publish asserted trade secrets that were already available to the general public, but the right to obtain confidential court records. Thus, in Standard & Poor's Corp. v. Commodity Exchange, 541 F.Supp. 1273, 1278 n.5 (S.D.N.Y 1982), the court distinguished the case before it from a prior restraint because the orders before it “did not prevent the press from disseminating news already gathered.”

Nevertheless each of these courts still applied some level of enhanced scrutiny.^²⁰ In In re the Iowa Freedom of Information Council, 724 F.2d 658, 661-63 (8^th Cir. 1983), the court criticized the trial court's failure to employ procedural safeguards and an augmented evidentiary burden to protect First Amendment interests. In Standard & Poor's, 541 F.Supp. at 1277, the court required proof that the material sought to be protected was indeed trade secrets and that serious and irreparable injury would occur. And in Zenith Radio, 529 F.Supp. at 912, the court balanced the magnitude and imminence of the threatened harm, analyzed the narrowness of the order, and looked for the availability of less restrictive alternatives).^²¹

The enhanced evidentiary burden and procedural safeguards developed by California courts should not be subject to a blanket exception for trade secrets, or as amici curiae RIAA et al. propose, a blanket exception for all unpatented processes that control access to copyrighted material regardless of whether they are trade secrets. This Court should not restrict the FirsT Amendment in the way urged by DVD CCA.

II. WHEN THE PROPER FIRST AMENDMENT TESTS ARE APPLIED, IT IS CLEAR THAT THE PRELIMINARY INJUNCTION IS AN UNCONSTITUTIONAL PRIOR RESTRAINT

That the First Amendment is implicated by DVD CCA's request for a preliminary injunction has four primary consequences, each set forth in Bunner's Opening Brief.

As stated above, the trial court's failure to analyze the preliminary injunction as a prior restraint, without more, evidences an abuse of discretion that will support a reversal of the trial court's order. See Paradise Hills Associates v. Procel, 235 Cal.App.3d 1528, 1538 (1991). Moreover, in cases raising First Amendment issues, the appellate court must eXamine the record independently to ensure that the judgment does not unnecessarily intrude on the fundamental right to free expression. Bose Corp. v. Consumers Union, 466 U.S. 485, 499 (1984).

And as set out in Bunner's Opening Brief, it is obvious from the trial court's opinion that the decision was based on factual findings that were admittedly speculative, and for some elements, that the trial court placed the burden of proof on Bunner.

On these bases alone, this Court may vacate the preliminary injunction and remand to the trial court with instructions to apply the appropriate First Amendment standards.

However, this Court has before it the entire record and the charge to analyze the record independently of the trial court. Id. It is therefore well positioned to decide that DVD CCA's motion for a preliminary injunction does not withstand constitutional scrutiny and should be denied.^²³

III. THE REQUESTED PRELIMINARY INJUNCTION WILL UNNECESSARILY INTRUDE ON BUNNER'S FIRST AMENDMENT RIGHTS

The arguments presented by DVD CCA in its Opposition Brief only make it more clear that its motion for preliminary injunction should be denied.^²⁴

As set forth in Bunner's Opening Brief, when the proper First Amendment analysis is employed, the balance of harms clearly favors Bunner. The preliminary injunction, as a prior restraint on Bunner's right to publish information on his website, will cause Bunner irreparable constitutional injury.^²⁵ Ketchens v. Reiner, 194 Cal.App.3d 470, 480 (1987) (“The loss of First Amendment freedoms for even minimal periods of time, unquestionably constitutes irreparable injury.”) By virtue of its pervasive chilling effect on others to exercise their fundamental right to publish, which DVD CCA will not dispute is the purpose of this action, the injunction will irreparably harm the general public as well. See American Booksellers' Ass'n v. Superior Court, 129 Cal.App.3d 197, 206 (1982). [App. Mem. at 18-19] These injuries are certainly not, as DVD CCA claims, “trivial.” [Resp. Mem. at 24]

The harm to DVD CCA, if any, is past, not future, economic harm. As its Opposition Brief makes clear, the asserted harm to DVD CCA has already occurred and the prohibition of future publication of DeCSS will not significantly diminish that harm. As the music industry has acknowledged, CSS is a “compromised” system. No injunction this court can issue will cure this or cause the music industry to use the old encryption system. Notably the music industry declarant did not testify that the industry would utilize CSS if this injunction were granted. [AA 335-37]^²⁶

DVD CCA attempts to prove harm by asserting that DVD movies would not be available if CSS had not been developed. But CSS was developed and DVD movies are widely and successfully marketed. No injunction this Court can issue will change that.

Because CSS is now a compromised system, the motion picture industry will need to decide whether to continue to use it or to implement a new security system like the music industry has chosen to.^²⁷ Or it may choose to focus its future efforts on stopping the unlicensed commercial distribution of its movies, which it admits is not currently a threat.^²⁸ [AA 488] Any comfOrt regarding the integrity of the system that the requested injunction could offer would be illusory. As DVD CCA admits, DeCSS has been widely disseminated internationally on the Internet and in other forms, such as on T-shirts.^²⁹

DVD CCA perhaps could claim that it will be harmed because its members will now need to upgrade their products to incorporate a new security system. However, DVD CCA' s “predecessor-in-interest” anticipated that such a move would at some point be necessary. It included in its licensing agreements a provision that forces licensees to make “emergency changes” to their products no later than 60 days after receiving notice of a change in specifications. [AA 513 ¶4.2]

Even so, the First Amendment dictates that the proper relief in a situation like this is not an injunction against publication, but an action for post-publication liability. “Subsequent civil or criminal proceedings, rather than prior restraints, ordinarily are the appropriate sanction for . . . misdeeds in the First Amendment context. CBS, Inc. v. Davis, 510 U.S. 1315, 1318 (1994). See also Nebraska Press Ass'n v. Stuart, 427 U.S. 539, 558 (1976) (explaining the preference for post-publication sanctions rather than prior restraints).

Bunner stands by his assertion that the DVD CCA may owe its continued existence to DeCSS. As DVD CCA concedes, “its sole business purpose is to be the tri-industry (motion pictures, computers and consumer electronics) licensing entity and administrator of the CSS technology.” [Resp. Mem. at 30] However, DVD CCA did not acquire the licensing interest in CSS until early December 1999, nearly two months after DeCSS allegedly first appeared on the Internet.^³⁰ If DeCSS genuinely threatens DVD CCA's existence, then DVD CCA should not have placed itself in such a tenuous position by acquiring the licensing rights to a compromised system.

And perhaps most importantly, DVD CCA has no response to the fact that an injunction issued in Santa Clara County may do little to stop the international publication and thus do little to alleviate the asserted harm to DVD CCA. As set forth in Bunner's Opening Brief, a court “must assess” the “probable efficacy of prior restraint on publication” to operate as a “workable method”of alleviating the harm that justifies the preliminary injunction. See Nebraska Press Ass'n v. Stuart, 427 U.S. 539, 565 (1976).

Given the heavy evidentiary burden facing DVD CCA to prove with certainty that it will be seriously and irreparably harmed by Bunner's publication of DeCSS, the recOrd simply does not support the issuance of the requested preliminary injunction.

B. DVD CCA Cannot Carry its Heavy Evidentiary Burden to Prove That it Will Likely Prevail on the Merits Because it Cannot Prove That Bunner Misappropriated its Trade Secrets

In order to obtain the preliminary injunction, DVD CCA must prove that it is likely to prevail on the merits. Therefore it was required to prove that Bunner misappropriated its trade secrets by publishing DeCSS on his website.

As set forth in Bunner's Opening Brief, DVD CCA bears a heavy evidentiary burden in demonstrating that a preliminary injunction against the exercise of free speech rights is justified. Paradise Hills v. Procel, 235 Cal.App.3d 1528, 1538-39 (1991). [App. Mem.at 12] And as is also set forth in Bunner's opening brief, there are numerous essential elements of DVD CCA's claim of misappropriation that find insufficient support in the record.

As discussed above, DVD CCA has not to date specified what part of CSS it claims is its trade secret. See supra note 2. Moreover, as set out in Bunner's Opening Brief, DVD CCA faces other obstacles to proving that DeCSS contains it trade secrets. [App. Mem. at 28-29] It is difficult for Bunner to contest the merit of a trade secret that has not been specifically identified and it is, for this Court, impossible to determine whether DVD CCA will ultimately be able to prove that these unspecified things are trade secrets.

Even if DVD CCA could prove the existence of trade secrets, it must still prove that those particular trade secrets were obtained utilizing improper means.

As the trial court acknowledged, key links in DVD CCA's evidentiary chain on this question are missing. Those deficiencies remain apparent at this level.

DVD CCA admits in its Opposition Brief that it does not know how DeCSS was created. It states that its trade secrets were obtained by “willfully ‘hacking' and/or reverse engineering software.” [Resp. Mem. at 7] The “and/or” is significant. DVD CCA is plainly guessing. Nor does DVD CCA know who performed this alleged hacking or reverse engineering or whether this person was under any obligation not to do so. [Resp. Mem. At 7]

DVD CCA's best guess, as it contended below, is that DeCSS was created by improper reverse engineering in Norway. However, DVD CCA supplied little evidence to support this theory. Indeed, the trial court acknowledged that DVD CCA's evidence to support its reverse engineering theory was “problematic.” [AA 702]

DVD CCA's best guess within its best guess reverse engineering theory is that software created by CSS licensee Xing Technology was reverse engineered. This Xing connection is necessary because DVD CCA needs to prove that such reverse engineering was improper. DVD CCA bases its assertion of impropriety on the existence of a “click licensing agreement”--one that appears on the computer screen and asks the viewer to click to indicate acceptance--that accompanies the Xing software which prohibits reverse engineering. [Resp. Mem. at 7-8]

However, the Xing connection stands on a shaky evidentiary basis. DVD CCA supports its contention with evidence that the Xing player key was identified in DeCSS. This proves nothing. As Frank A. Stevenson explained, once CSS was decrypted, all 400 keys were available to those creating a new program. Thus, “the mere publication of a valid player key cannot be taken as proof that misappropriation of trade secrets occurred.” [AA 227] No evidence was offered to the contrary.

As Stevenson further explained, “there are a variety of methods to crack the encryption scheme without ever seeing or agreeing to a Xing license agreement.” [AA 228] Thus DVD CCA's claim that access to the CSS technology “could only be obtained by violating Xing's software license agreement” is wrong.^³¹ [Resp. Mem. at 8]

Moreover, necessary underpinnings of DVD CCA's best guess are the findings that (1) a “click liceNsing agreement” is enforceable eveN if it were not actually clicked on, and (2) that the right to reverse engineer to obtain interoperability may be contracted away under Norwegian law. The trial court, after reviewing the declarations submitted by the parties from experts on this issue, [AA 634-41; 305-34] then acknowledged that it was not well positioned to interpret this question of Norwegian law and left it unresolved.^³² [AA 713].

In sum, DVD CCA claims DeCSS was derived from CSS, but does not know how, when or by whom, or under what circumstances. Moreover, even under its best guess scenario, it cannot prove impropriety, a necessary element of its misappropriation action.

Even if DVD CCA could prove that DeCSS was derived from CSS trade secrets and that those trade secrets were obtained by improper means, it must still prove that Bunner knew or should have known all of these things. That is, under its best guess theory, DVD CCA must prove that Bunner should have known that:

If the trial court was not “well positioned” to make some of these determinations, how could Bunner be?

Furthermore, Bunner testified in his declaration that he had no information that DeCSS contained trade secrets or involved a misappropriation of tRade secrets and had no reason to believe DeCSS was improperly created. [AA288]

As DVD CCA's Opposition Brief makes clear, it simply cannot carry its heavy evidentiary burden in this respect. DVD CCA relies exclusively on postings to slashdot.org to prove that Bunner, and “the entire hacker community,” [Resp. Mem. at 28] should have known that DeCSS contains improperly acquired trade secrets. Even if the Court could assume under this enhanced evidentiary standard that Bunner was monitoring these particular slashdot.org discussions, it cannot find that Bunner had the required knowledge of impropriety. See McGill v. Brock, 76 Cal.App.4th 1396, 1406 (1999) (reviewing the authority and holding that knowledge cannot be imputed based on newspaper articles).

DVD CCA provided to the record only limited selections from months of slashdot.org discussions, and it provided an even smaller subset in its OpposItion Brief.^³³ Nevertheless, only three of the excerpts provided by DVD CCA in its brief opine about the impropriety of the alleged reverse engineering (as evidence for which these excerpts are offered).

Many other excerpts from the record show that there were many commentators who believed that the publication of DeCSS would not be misappropriation. For example:

Importantly, none of these statements were made by Bunner. Bunner did not use intemperate language or make statements flaunting his position as a defendant, or indicate his resentment against DVD CCA the way some of the other defendants did. The statements made by some of the other defendants are not evidence against Bunner.

In an effort to bolster this obvious evidentiary weakness for this appeal, DVD CCA, for the first time, claims that DeCSS first appeared on the Internet on October 25, 1999, only one day before Bunner posted it on his website. Yet, DVD CCA's president testified that the first publication was October 6,^³⁴ [AA479] and the trial court so found. [AA 712]

Therefore, DVD CCA has not carried its heavy evidentiary burden of proving that it is likely to prevail on its claim that Bunner misappropriated trade secrets.

C. Any Injunction Issued Must Be Limited in Time, and Neither Vague nor Overbroad.

The First Amendment requires that any injunction limiting First Amendment rights be limited in time and be neither vague nor overbroad. As set out in Bunner's Opening Brief, the preliminary injunction issued by the trial court was defective in all three respects. [App. Mem. at 15-17] If this Court decides that DVD CCA's request for preliminary injunction withstands First Amendment scrutiny, it must issue one that is appropriately narrowly tailored to comport with these standards.

For all these reasons, DVD CCA's request for a preliminary injunction must be denied.

Trade secrets are not exempt from the First Amendment. DVD CCA's effort to so limit the First Amendment under California law must be rejected.

Bunner is not contending that trade secrets can never be protected. But any effort to protect them must be consistent with the First Amendment and article 1, section 2 of the California Constitution. Under these well established constitutional principles, DVD CCA's request for a preliminary injunction must be denied.

This Court should reverse the trial court and vacate the issuance of the preliminary injunction.

1 As set out in Bunner's Opening Brief [App. Mem at 5], the finding that the trial court failed to adequately consider Bunner's First Amendment rights indicates an abuse of discretion in and of itself. See Paradise Hills Associates v. Procel, 235 Cal.App.3d 1528, 1538 (1991). Moreover, in cases raising First Amendment issues, the appellate court must examine the record independently to ensure that the judgment does not unnecessarily intrude on the fundamental right to free expression. Bose Corp. v. Consumers Union, 466 U.S. 485, 499 (1984). Thus, the appropriate standard of review is much less deferential than that urged by DVD CCA.

2 As of the writing of this brief, DVD CCA, despite repeated requests, has not yet filed its statement pursuant to Cal. Code of Civil Procedure §2019(d), which requires the party alleging misappropriation under the UTSA to “identify the trade secret with reasonable particularity.”

DVD CCA does state in its Opposition Brief that “CSS is proprietary trade secret technology.” [Resp. Mem. at 5] And the trial court did find that “CSS is a piece of proprietary information.” [AA 713] However, it is clear that DVD CCA does not contend that the whole of CSS is a trade secret. As it acknowledges in its Opposition Brief, the CSS licensing agreement requires that only “certain defined pieces of information, such as the proprietary algorithms and ‘master keys' be kept confidential.” [Resp. Mem. at 6] The licensing agreement is similarly ambiguous. [AA 507]

DVD CCA does not in its Opposition Brief identify the specific part of CSS which it asserts is its trade secret. Instead, DVD CCA carefully avoids the issue in its brief, referring to “the proprietary information at issue” [Resp. Mem. at 2] and “trade secrets which DVD CCA licenses under the CSS agreement” [Resp. Mem. at 7]. DVD CCA was no more explicit before the trial court.

DVD CCA puts much stock in Frank Stevenson's declaration that DeCSS “uses CSS ciphers.” [AA 225] However, DVD CCA has not yet stated that “CSS ciphers” are the part that are its trade secrets.

3 Surely, if the injunction were sought against a newspaper's publication of DeCSS, DVD CCA could not reasonably assert that the First Amendment is not implicated at all. The constitutional issues would be obvious. Indeed, DVD CCA did not sue either the San Jose Mercury News, [AA 215] The New York Times, USA Today or any of the other mainstream newspapers that linked to a DeCSS posting in its on-line version, even though individuals who linked to DeCSS postings were sued. The constitutional issues should be as obvious here as they are with the newspapers. As set out in Bunner's Opening Brief, under California law, the general public is afforded the same constitutional right to publish as the established media. [App. Mem. at 7 n.3] See Nizam-Aldine v. City of Oakland, 47 Cal.App.4th 364, 374-75 (1994).

4 The court noted that there were some circumstances where an injunction against the disclosure of trade secrets may issue, namely “where a party has obtained them by breaching its confidential relationship with the owner, or by procuring another to breach a confidential relationship with the owner.” Bridge C.A.T. Scan, 710 F.2d at 946 (citations omitted). However the court was not as clear on the propriety of an injunction “where a party has obtained them innocently but has thereafter learned of their misappropriation.” Bridge C.A.T., 710 F.2d at 946 (citing New York Times Co. v. United States, 403 U.S. 713 (1971)). See also Ordo Templi Orientis v. City of Berkeley, 1991 U.S. Dist. LEXIS 15018 at *9-10 (N.D. Cal. 1991) (noting that “a preliminary injunction may be considered proper in connection with trade secrets and misappropriated information” only in “very limited circumstances”).

5 The Oregon Supreme Court defined “third party publisher” as “a person other than one who holds the trade secret and one to whom the trade secret is disclosed in a confidential relationship where secrecy prevails.” Oregon ex rel Sports Management News v. Nachtigal, 921 P.2d 1304, 1305 n.1 (Ore. 1996). The court drew the same distinction--between those who receive trade secrets under some confidential relationship and those who obtain them innocently--that Bunner urged this Court to adopt in its Opening Brief.

6 The Oregon Supreme Court also explained that the constitutionality of the section of the Oregon Act that authorizes injunctions against misappropriation — the analogue of the California Act relied on by DVD CCA — was not before it. But the court “hastened to add” that it did not mean to imply that its ultimate result, that is, striking down the injunction, would be different. Sports Management, 921 P.2d at 1307 n.3.

10 According to DVD CCA's logic, a prohibition on the exhibition of a movie would not implicate the First Amendment as long as the exhibitor was permitted to “discuss, criticize or comment upon” the movie. Surely, the motion picture industry, one of the components of DVD CCA, would not want this court to adopt that line of reasoning. See Erznoznik v. City of Jacksonville, 422 U.S. 205 (1975) (overturning ordinance prohibiting the exhibition of certain movies at drive-in theaters).

12 DVD CCA's reliance on Boehner v. McDermott, 191 F.3d 463, 476 (D.C. Cir. 1999) is similarly misplaced. In that case, only Judge Randolph found that free speech rights were not implicated with respect to a restriction on information obtained by way of an illegal wiretap. Judge Ginsburg, concurring in the judgment, found Judge Randolph's characterization of the free speech rights to be unnecessary dictum and applied intermediate scrutiny. Id. at 481. Judge Sentelle dissented because he believed the free speech interests required the application to strict scrutiny to the applicable statute. Id. at 481. Moreover, Judge Randolph's formulation was expressly rejected by the Third Circuit in Bartnicki v. Vopper, 200 F.3d 109, 123 (3^rd Cir. 1999).

13 See cases cited by DVD CCA: Kewannee Oil Co. v. Bicron Corp., 416 U.S. 470, 475 (1974) (“The protection accorded the trade secret holder is against disclosure or unauthorized use of the trade secret by those to whom the secret has been confided under the express or implied restriction of nondisclosure or nonuse.”); Empire Steam Laundry v. Lozier, 165 Cal. 95 (1913) (enforcing non compete clause of employment contract over claims of improper restraint of trade); Abba Rubber Co. v. Seaquist, 235 Cal.App.3d 1 (1991); Courtesy Temp. Serv. v. Camacho, 222 Cal.App.3d 1278 (1990) (enjoining unfair business practices by former employees pursuant to Cal. Business & Professions Code §17200); American Credit Indemnity Co. v. Sacks, 213 Cal.App.3d 622 (1989); MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511 (9^th Cir. 1993); In re Phoenix Dental Sys. Inc., 144 B.R. 22 (W.D. Pa. 1992) (enjoining unfair competition); Cherne Indus. v. Grounds & Assoc., 278 N.W.2d 81 (Minn. 1979); Garth v. Staktek, 876 S.W.2d 545 (Tex.App. 1994) (enforcing nondisclosure agreement between former business partners). See also Roberts v. McKee, 29 Ga. 161 (1859) (former partnership), and Peabody v. Norfolk, 98 Mass. 452, 459 (1868) (former employee) which both relied on Justice Story's statement that “courts of equity will restrain a party from making a disclosure of secrets communicated to him in the course of a confidential employment.” 2 Story Equity §952. Another case, Religious Technology Center v. Netcom On-Line Communication Services, 1997 U.S. Dist. LEXIS 23572 (N.D. Cal., Jan. 3, 1997), deals with the breach of a confidentiality agreement by a former member of a religious organization.

Amici curiae RIAA et al. make the identical argument using largely the same cases. The only case cited for this point by RIAA et al. that was not previously relied upon by DVD CCA is also a former employee case in which the use of trade secrets in unfair competition was enjoined. See Morlife, Inc. v. Perry, 56 Cal.App.4th 1514 (1997).

16 This ruling is currently the subject of a motion to set aside the preliminary injunction on the basis that no evidence of piracy has been offered.

Amici curiae RIAA et al.devote much of their brief to rearguing Reimerdes before this Court. However, the case before this Court is a trade secret case not an action under the Digital Millennium Copyright Act. Any attempts to graft the DMCA on to California law should be rejected.

17 "Although this Court has assumed that DeCSS has at least some expressive content, the expressive aspect appears to be minimal when compared to the functional component.” Reimerdes, 82 F.Supp.2d at 222. In this litigation, DVD CCA disagrees with that characterization of DeCSS. In its Opposition Brief it has restated its position that it announced in oral argument before the trial court that DeCSS is speech in the same way music is. [Resp. Mem. at 18 n.5; RT 39:19-20]

And although amici curiae RIAA et al. like to refer to DeCSS as a mere “ignition key,” the metaphor is inapt. The preliminary injunction that is the subject of this appeal covers not only posting on the Internet, where DeCSS has a functional component, but posting anywhere in any medium. Thus, this injunction prevents DeCSS from being set to music and recorded, or printed in a novel, or filmed, and subsequently distributed.

18 DVD CCA makes the implicit argument that any use of DeCSS would amount to copyright infringement. However, the license to play a DVD movie runs with the DVD itself. Thus anyone who legally purchases or rents a DVD movie can watch the movie without infringing a copyright regardless of what kind of DVD player she or he uses. Compare Sony Computer Entertainment v. Connectix Corp., 203 F.3d 596 (9^th Cir. 2000) (analyzing the development of software that would allow video games to be played on a regular computer).

19 As the cases all note, the U.S. Supreme Court had not decided at the time of the decision whether the First Amendment provides a right of access to all civil proceedings. See, e.g., Zenith Radio Corp. v. Matsushita Electric Industrial Co., 529 F.Supp. 866, 908, 913 (E.D. Pa. 1981) (discussing the uncertain state of the law at that time and concluding that “a constitutional right of access to judicial records does not exist”).

21 In addition, both DVD CCA and amici curiae RIAA et al. curiously cite Masonite Corp. v. County of Mendocino Air Quality Management Dist., 42 Cal.App.4th 436 (1996). This case dealt with whether a state agency need disclose records pursuant to the California Public Records Act. It is well established under California law that the right to obtain public records is of statutory, not constitutional, origin. See United Reporting Publishing Co. v. Lungren, 946 F.Supp. 822, 824 (S.D.Cal. 1996) (noting with respect to the California Public Records Act that the “First Amendment directly protects the expression of information already obtained; it does not guarantee access to the sources of information”); Black Panther Party v. Kehoe, 42 Cal.App.3d 645, 654 (1974).

Both DVD CCA and amici curiae RIAA et al. also cite Dallas Cowboys Cheerleaders, Inc. v. Scoreboard Posters, 600 F.2d 1184 (5^th Cir. 1979), to support its contention that trade secrets trump First Amendment rights. That case, in which the court grounded its holding in the “constitutional dimension” of copyright law, is inapposite in the trade secret context. Id. at 1187. Bunner does not disagree that prior restraint analysis is not applied to requests for preliminary injunctions of copyright infirngement due to copyright law's built in accommodation to the First Amendment, namely the fair use doctrine. However, the case before this Court is not a copyright case.

25 As DVD CCA contends that the First Amendment does not apply at all, it does not respond to Bunner's argument that he has suffered an irreparable constitutional injury. Rather, it restates its curious assertion that Bunner's First Amendment rights are limited to discussing, debating and criticizing DVD encryption, and that he does not have an independent constitutional right to publish. [Resp. Mem. at 32]

26 Nor did the movie industry declarant indicate whether that industry would continue to use CSS even if the injunction were granted or whether it would adopt the new DeCSS-proof security system being developed for DVD music. [AA 060-65]

Amici curiae RIAA et al. argue that there exists a strong public interest in protecting encryption systems like CSS. However, Bunner is not asking this Court to announce a rule regarding the value of all encryption systems that protect copyrighted material. This Court must look only to the harm caused by denying the preliminary injunction before it, not preliminary injunctions that may be sought with respect to other encryption systems in the future.

30 According to the record, DVD CCA was assigned the licensing interest in CSS by its unnamed “predecessor-in-interest.” [AA073] Most references to this mysterious entity are redacted from the licensing agreements DVD CCA submitted to the record. However, some unredacted portions indicate that the licensing entity was MEI, or Matsushita Electronic Industrial Co., [AA 526 ¶9.2(b); AA 530¶10.8] information that is confirmed by one of DVD CCA's attorneys. [AA 156] Bunner does not know why the license was transfered shortly before this litigation and why DVD CCA wants to keep MEI's identity a secret. Perhaps Matsushita wanted to avoid negative publicity. Or perhaps it would have been difficult for Matsushita, as an individual corporation, to assert that the technology it shares with its competitors is a trade secret. Regardless of the reason, it seems clear that presently at least one of DVD CCA's “business purposes” is to be the plaintiff in this litigation.

33 Slashdot.org is a highly trafficked site. According to the evidence DVD CCA submitted, the posting of the notice of this lawsuit drew over 400 comments in 8 hours. [AA 083]

As the excerpts make clear, participants in the slashdot.org discussions commonly identify themselves by email address. Thus Bunner has no way of knowing if any of the commentators had any first hand knowledge or expertise in this area, or if any one was more credible than another. Surely, Bunner's First Amendment rights cannot turn on occasional anonymous postings.

Most of the discussants commented not as to the propriety of the alleged reverse engineering but as to the likelihood that they would be sued. These opinions about being dragged into court are no more evidence of impropriety than is the filing of this lawsuit itself.

Reply Brief of Appellant Andrew Bunner, in DVD-CCA v. Bunner

CA; July 6, 2000