DVD CCA Complaint
in DVD CCA v. McLaughlin, Bunner, et al.

(DVD CAA Complaint for Injunctive Relief for Misappropriation of Trade Secrets; Dec. 28, 1999, misdated Jan. 1, 2000.)

1 January 2000

See Court's denial of Temporary Restraining Order and notice to defendants: http://cryptome.org/dvd-order.htm

See nine Court filings by plaintiff: http://cryptome.org/dvd-v-521.htm (194K); Zipped: http://cryptome.org/dvd-v-521.zip (47K)

28 December 1999. Thanks to A. for suggesting link activation to DVD sites.

27 December 1999. Thanks to RH.
Source: http://douglas.min.net/~drw/css-auth/legal-info

WEIL, GOTSHAL & MANGES LLP
JARED B. BOBROW (State Bar. No. 133712)
2882 Sand Hill Road, Suite 280
Menlo Park, California 94025
Telephone:  (650) 926-6200
Facsimile:  (650) 854-3713

OF COUNSEL:

WEIL, GOTSHAL & MANGES LLP
ROBERT G. SUGARMAN*
JEFFREY L. KESSLER^*
767 Fifth Avenue
New York, New York 10153
Telephone:  (212) 310-8000
Facsimile:  (212) 310-8007

Attorneys for Plaintiff

DVD Copy Control Association, Inc.

Additional Counsel Listed On The Signature Page

SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SANTA CLARA

                       Plaintiff, the DVD Copy Control Association, Inc. (“DVD CCA”), by its attorneys, Weil, Gotshal & Manges LLP, for its Complaint, alleges as follows:

INTRODUCTION

1.                   Plaintiff, DVD CCA, a trade association and the sole licensing entity for Digital Video Disc (“DVD”) technology, brings this action to enjoin defendant web site owners (“Defendants”) from their continued misappropriation of trade secrets licensed by DVD CCA.  DVD CCA is informed and believes, and based thereon alleges that Defendants have disclosed, and continue knowingly and willfully to disclose, proprietary information on their Internet web sites as part of a scheme to defeat DVD encryption software which thus enables users to illegally pirate copies of DVD videos.

2.                   The named defendants, and certain Doe defendants, continue their unauthorized posting of proprietary information -- which they either obtained by improper means or knew or should have known was obtained by others by improper means -- despite the fact that cease and desist letters were sent to their web sites demanding that such proprietary information be taken down from their sites.  After receiving such notice, many such web sites voluntarily removed the proprietary information at issue from their sites.  Certain defendants have not received any notice to date because their existence has only recently come to the attention of DVD CCA.

3.                   Defendants’ posting of the proprietary information licensed by DVD CCA on their web sites has caused the illegal pirating of the motion picture industry’s copyrighted content contained on DVDs.  Defendants’ actions threaten the financial stability of this new digital video format for viewing movies and other images -- which has thus far been well received by the consuming public.  Additionally, Defendants’ actions threaten the very existence of DVD CCA and the hundreds of companies involved in the DVD industry, including 73 companies in California of which there are 42 in this county and an additional 17 in other Bay area locations.  Moreover, if Defendants are not restrained and enjoined, their unchecked illegal activities will chill future technological innovation in the motion picture, consumer electronics and computer industries and discourage other industries from making their content available to the public (as the motion picture industry has done here) in new formats.

PARTIES

The Plaintiff

4.                   Plaintiff, DVD CCA, is a not-for-profit trade association organized under the laws of the State of Delaware and has its principal place of business at 225 B Cochrane Circle, Morgan Hill, California.  DVD CCA is the sole licensor of a proprietary system for the encryption and decryption of data contained on DVDs known as the Content Scramble System (or “CSS”).

The Defendants

5.                   DVD CCA is informed and believes, and based thereon alleges, that defendant Andrew Thomas McLaughlin (“McLaughlin”) is a citizen of the State of California, and operates an Internet web site addressed as mclaughlin.orange.ca.us/~andrew.

6.                   DVD CCA is informed and believes, and based thereon alleges, that defendant Andrew Bunner (“Bunner”) is a citizen of the State of California, and operates an Internet web site addressed as www.sharedlib.org/decss.zip.

7.                   DVD CCA is informed and believes, and based thereon alleges, that defendant John V. Kew (“Kew”) is a citizen of the State of California, and operates an Internet web site addressed as www.logorrhea.com/deCSS.html.

8.                   DVD CCA is informed and believes, and based thereon alleges, that defendant Scott Karlins (“Karlins”) is a citizen of the State of Georgia, and operates an Internet web site addressed as www.theresistance.net/files.html.

9.                   DVD CCA is informed and believes, and based thereon alleges, that defendant Glenn Rosenblatt (“Rosenblatt”) is a citizen of the State of New York, and operates an Internet web site addressed as www.pzcommunications.com/decss/main.html.

10.               DVD CCA is informed and believes, and based thereon alleges, that defendant Dale Emmons (“Emmons”) is a citizen of the State of Wisconsin, and operates an Internet web site addressed as www.frozenlinux.com/civ/decss.

11.               DVD CCA is informed and believes, and based thereon alleges, that defendant Emmanuel Goldstein (“Goldstein”) is a citizen of the State of New York, and operates an Internet web site addressed as www.2600.com/news/1999/1112.html.

12.               DVD CCA is informed and believes, and based thereon alleges, that defendant Douglas R. Winslow (“Winslow”) is a citizen of the State of Maryland, and operates Internet web sites addressed as douglas.min.net/~drw/css-auth and Chatzone.org/~drw/css-auth.

13.               DVD CCA is informed and believes, and based thereon alleges, that defendant Jonathan Blank (“Blank”) is a citizen of the State of Oklahoma, and operates an Internet web site addressed as caspian.twu.net/dvd.

14.               DVD CCA is informed and believes, and based thereon alleges, that defendant Roger Kumar (“Kumar”) is a citizen of the State of Pennsylvania, and operates an Internet web site addressed as www.bigteam.org.

15.               DVD CCA is informed and believes, and based thereon alleges, that defendant Robert Jones (“Jones”) is a citizen of the State of South Carolina, and operates an Internet web site addressed as www.dev.zero.org/freecss.html.

16.               DVD CCA is informed and believes, and based thereon alleges, that defendant En Hong (“Hong”) is a citizen of the State of Georgia, and operates an Internet web site addressed as www.dvd-digest.com.

17.               DVD CCA is informed and believes, and based thereon alleges, that defendant Matthew Robert Pavolich (“Pavolich”) is a citizen of the State of Indiana, and operates an Internet web site addressed as www.livid.on.openprojects.net.

18.               DVD CCA is informed and believes, and based thereon alleges, that defendant Ian A. Gulliver (“Gulliver”) is a citizen of the State of New York, and operates an Internet web site addressed as www.gullii.stu.rpi.edu/dvd.

19.               DVD CCA is informed and believes, and based thereon alleges, that defendant Jon Hanson (“Hanson”) is a citizen of the State of Kansas, and operates an Internet web site addressed as www.jonhanson.com/dvd.

20.               DVD CCA is informed and believes, and based thereon alleges, that defendant David M. Chan (“Chan”) is a citizen of the State of Minnesota, and operates an Internet web site addressed as www.dumn.edu/~dchan/css.

21.               DVD CCA is informed and believes, and based thereon alleges, that defendant Cameron Simpson (“Simpson”) resides in Dundas Valley, Australia, and operates an Internet web site addressed as www.zip.com.au/~cs.

22.               DVD CCA is informed and believes, and based thereon alleges, that defendant Tom Vogt (“Vogt”) resides in Wedel, Denmark, and operates an Internet web site addressed as www.lemuria.org/DeCSS.

23.               DVD CCA is informed and believes, and based thereon alleges, that defendant Cyril Amsellem (“Amsellem”) resides in Val de Marne, France, and operates an Internet web site addressed as www.dvd-area.com.

24.               DVD CCA is informed and believes, and based thereon alleges, that defendant Thorsten Fenk (“Fenk”) resides in the country of Germany, and operates an Internet web site addressed as tasam.com/~fenkt/dvd.

25.               DVD CCA is informed and believes, and based thereon alleges, that defendant Adrian Baugh (“Baugh”) resides in Oxford, England, and operates an Internet web site addressed as merlin.kebble.ox.ac.uk/~adrian/css/mirrors.html.

26.               DVD CCA is unaware of the true names and/or capacities of the defendants sued herein under the fictitious names Does 1-500, pursuant to Code of Civil Procedure Section 474, who each were responsible in some way for the acts and omissions complained of herein.  DVD CCA will seek leave of court to amend the complaint to allege such names and capacities at such time as they are ascertained.

27.               DVD CCA is informed and believes, and based thereon alleges, that each of the Doe defendants 1 through 26 operate Internet web sites, at the below addresses, which disseminate confidential proprietary CSS information and also provide “links” to other web sites which disseminate such information:

28.               DVD CCA is informed and believes, and based thereon alleges, that each of the Doe defendants 27 through 54 operate Internet web sites, at the below addresses, which disseminate confidential proprietary CSS information:

29.               DVD CCA is informed and believes, and based thereon alleges, that each of the Doe defendants 55 through 72 operate Internet web sites, at the below addresses, which provide “links” to other web sites which disseminate confidential proprietary CSS information:

ALLEGATIONS

DVD Format and Need For Copy Protection

30.               DVDs provide high quality images, such as motion pictures, digitally formatted on a convenient 5-inch disc that is resistant to wear and damage and allows for many attractive consumer features not presently available in other video formats.  DVD video discs containing data comprising motion pictures in encrypted form can be played either on special purpose machines (“DVD Players”) or personal computers (“PCs”) equipped with DVD drives.  Encryption is necessary to prevent copying of the copyrighted material on the DVD.  In order that the copyrighted motion picture can be played, either form of player device requires implementation of the CSS algorithm and “master keys” to carry out the decryption of the data stored on the disc.  The implementation that provides this decryption function is developed by the licensees of DVD CCA using the detailed specifications which is provided by DVD CCA to such licensees.

31.               Before allowing their copyrighted motion pictures to be used on the DVD format, the motion picture companies insisted on a viable copy protection system to prevent users from making copies of the motion pictures.  Such protection is necessary to prevent copying from discs that are rented or borrowed and, more importantly, to prevent broader scale piracy through widespread transmission of these motion pictures over the Internet and widespread distribution of “pirated” discs in competition with the authorized prerecorded discs.

32.               Without the motion picture companies’ copyrighted content for DVD video, there would be no viable market for computer DVD drives and DVD players, as well as the related computer chips and software necessary to run these devices and, thus, there would be no DVD video industry.

33.               CSS is proprietary technology that was developed to provide the protection demanded by the motion picture companies against unauthorized copying of their copyrighted material.  This proprietary technology, including trade secrets, is currently being licensed by DVD CCA, as the sole duly authorized licensing entity for the CSS technology.  Any party desiring lawfully to use the CSS technology -- either to encrypt content or decrypt content -- must do so through a license from DVD CCA.

The CSS Agreement as Mechanism to Protect DVD Encryption Software

34.               Beginning on or about October 31, 1996, DVD CCA’s predecessor-in-interest began licensing CSS technology pursuant to an agreement that later became the Amended and Restated CSS Interim License Agreement, including the related CSS PROCEDURAL AND AMENDED AND RESTATED TECHNICAL SPECIFICATIONS (collectively, the “CSS Agreement”).  Since that time hundreds of licensees have entered into the CSS Agreement.  The CSS Agreement sets forth the terms and conditions under which the CSS licensing entity (currently DVD CCA) would grant licenses to, among others, manufacturers of DVD players or DVD drives and related hardware and software.  Licensees were granted the right to use the security system on DVD products and agreed to safeguard the CSS technology from public disclosure.

35.               The CSS Agreement gives the licensees the right to use the technology, and provides the necessary descrambling technology and “master keys” to do so.  The proprietary technology is not accessible to unlicensed third parties because it is either incorporated in hardware devices -- chips -- or made tamper resistant if distributed in the form of actual software.  Both forms of distribution are such that the proprietary technology cannot be viewed by non-licensees.  Each licensee is assigned a set of “master keys” unique to each licensee.  When the DVD system was created, approximately 400 such “master keys” were predesignated, to be assigned to licensees over time, and each DVD disc contains, in a part of the disc not normally read by the player device, a file containing the 400 “master keys.”  The system will not operate unless the key contained in the licensee’s decryption module (a chip or software program) matches one of the “master keys” stored on the DVD disc.

36.               The CSS Agreement requires licensees to maintain the confidentiality of certain defined pieces of information, such as the algorithms and “master keys” and, as such, licensees are subject to a very stringent set of rules to ensure the maintenance of confidentiality within the group of licensees.

37.               Among the safeguards taken is the requirement that only those licensees that absolutely need to know a particular algorithm and/or key are provided with such information.  For example, a manufacturer of semiconductor chips for descrambling CSS content in stand-alone DVD players is provided with information necessary for manufacturing such chips but not with information concerning the scrambling process itself or the authentication between DVD drives and the descrambling module used for computer-based implementations.   Companies that merely assemble parts and components produced by others may be required to be licensees in order to purchase such parts and components, but these companies are not provided with the proprietary CSS information at issue.

38.               The CSS Agreement mandates that licensees provide the proprietary CSS technology at issue only to the strictest minimum number of licensee's employees who require access to the information, beginning with only three employees and expanding beyond three only upon notification to the licensor of the names of the additional employees.   Licensees who violate these requirements are subject to liquidated damages in the amount of $1 million per violation (with a cap based on profits made from the sale of licensed products).

39.               Additionally, licensees implementing authentication and descrambling functions in the software are required to do so only in a manner that obscures the proprietary CSS technology at issue, so as effectively to frustrate anyone seeking to obtain such proprietary information.  Specific means of accomplishing this protection requirement are provided to licensees to illustrate the types of measures to be taken and the level of technical skill that must be employed to defeat any such measures.  Failure to abide by these operating restrictions can subject the licensee to injunctions prohibiting the sale of the product in which the failure occurs, through actions brought either by the licensor or by third party beneficiary content owners.

Creation of DVD CCA

40.               DVD CCA’s predecessor-in-interest began the process of licensing companies to use the technology pursuant to copy protection rules contained in the “procedural specifications” associated with the CSS Agreement.  The companies in the DVD video business (motion picture, computer, and consumer electronics companies) recognized that the licensing of CSS technology, which is and was critical to the adoption of the DVD video format, ought to be controlled and administered by the companies in the three industries together and that the costs associated with such critical intellectual property protection should be borne by the hundreds of companies involved in the DVD video business.

41.               The DVD industry agreed that the best solution would be the creation of a licensing entity owned and controlled by the licensees of the technology, pursuant to governance rules that balanced the interests of the three industries involved.

42.               The DVD Copy Control Association, Inc. was, therefore, formed in December 1998 as a Delaware not-for-profit trade association.

43.               The transition to have DVD CCA become this tri-industry licensing administrator began some time ago.  In September 1999, DVD CCA hired its first staff and occupied offices in Morgan Hill, California.  Following staff training and working with personnel of DVD CCA’s predecessors-in-interest, who have administered the CSS Agreement, in early December 1999, DVD CCA and its predecessor signed an agreement, whereby DVD CCA began itself to handle the day-to-day licensing tasks pursuant to the CSS Agreement.

44.               In mid-December 1999, DVD CCA’s predecessor-in-interest assigned its licensing interests under the CSS Agreement making DVD CCA the sole licensing entity which grants licenses to the CSS technology in the DVD video format.  Additionally, DVD CCA was given direct rights to enforce the CSS Agreement.

The “Hack” of the CSS Technology

45.               As early as October 25, 1999, the source code of a program named DeCSS was posted on the Internet by Jon Johansen, an individual residing in Norway, on the web site mmadb.no/hwplus/Software/DeCSS/decss.html.  The DeCSS program which appeared on this web site embodies, uses, and/or is a substantial derivation of confidential proprietary information which DVD CCA licenses pursuant to the CSS Agreement.  The DeCSS program and links to other sites with the DeCSS program were removed from the web site on or around November 8, 1999.  The program was removed by Mr. Johansen after a demand to remove the infringing information was sent to him by an attorney from Simsonsen & Musæus, a Norwegian law firm.  A link to the DeCSS program reappeared on the site on December 11, 1999.  It is not clear who is responsible for posting the link.  The web site operator is named as Doe defendant 70 in this Complaint. 

46.               On information and belief, the DeCSS program first appeared in the United States, as early as October 25, 1999, on a web site operated by defendant Pavolich addressed as www.livid.on.openprojects.net.

47.               On information and belief, this proprietary information was obtained by willfully “hacking” and/or improperly reverse engineering software created by CSS licensee Xing Technology Corporation (“Xing”).  Xing’s software is and was licensed to users under a license agreement which specifically prohibits reverse engineering.

48.               Since the October 25, 1999 appearance of DeCSS, proprietary CSS information has been displayed on web sites (or by web sites “linking” to other web sites which display the information) in at least 11 states and 11 countries throughout the world.  Extensive investigative efforts were immediately undertaken by DVD CCA and the Motion Picture Association’s (“MPA”) anti-piracy task force, to locate web sites which were posting and/or “linking” to other sites posting the proprietary information, and Internet service providers which were hosting such sites.  The MPA sent notices to 66 web sites and Internet service providers demanding that this information be removed immediately.  After receiving such notice, approximately 25 of these web sites and Internet service providers voluntarily removed the proprietary information or “links” to the information at issue.  On information and belief, all named defendants (with the exception of defendant Hanson) and Does 1, 8, 10 through 14, 16, 26, 28, 31, 32, 33, 35, 48 through 54, and 62 through 72 have received notice through the MPA and refused to remove the information at issue.  Defendant Hanson and the other Doe defendants have not received any notice to date because their existence has only recently become known. 

49.               Defendants knew or should have known when they posted or provided “links” to the DeCSS program on their web sites that it was being made available by virtue of the unauthorized use of proprietary information and that they were misusing proprietary confidential information gained through improper means.  This is because the DeCSS program has the capability to defeat DVD encryption software and, as a result, the DeCSS program allows users to illegally pirate the copyrighted motion pictures contained on DVD videos - - activity which is fatal to the DVD video format and the hundreds of computer and consumer electronics companies whose businesses rely on the viability of this digital format.

50.               Information posted on Defendants’ web sites establishes that they are fully aware that, in posting or “linking” to the DeCSS program, they are wrongfully appropriating proprietary trade secrets.  For example:

                        (a) Defendant McLaughlin explains to visitors of his site:  " Mark of the scofflaw!  Here's my local copy of the CSS decryption software, enjoy[;]"

                        (b)  Defendant Baugh acknowledges that “I may very well be sued….”

                        (c)  Doe defendant 14 challenges:  “I have the money to go to court.  Your call[;]”

                        (d) in response to the MPA and DVD CCA’s anti-piracy efforts, including cease and desist letters, defendants Vogt, Blank, and Doe defendants 4, 9, 23 and 37 provide a “Note to the lawyers and other scum … It was the DVD consortium that f***up, …[;]”

                        (e) similarly, defendant Jones explains “Listen, lawyers, and those you represent:  This is none of your concern.  The horse has been let out[;]” mocking the “trained weasels you call lawyers[;]”

                        (f) Doe defendant 35 states:  “F[_ _ _] da feds! … “[h]uh?  Aren’t these files legal?  Oh, well, I didn’t know that!”

51.               DVD encryption technology was (and is) critical to the adoption and utilization of the DVD format.  Without such copy protection, the motion picture companies would not have allowed their copyrighted motion pictures to be available in this new digital video format.  Without motion picture content, there would be no viable market for computer DVD drives and DVD players, as well as the related computer chips and software necessary to run these devices.  Accordingly, the Defendants’ continued misappropriation of proprietary CSS technology will have a devastating effect on DVD CCA and many other California businesses in the motion picture, computer, and consumer electronics industries, who have invested substantial amounts of money and resources in the development of the DVD video format.

52.               The sole business purpose and reason for the existence of DVD CCA, a trade association headquartered in Morgan Hill, California, is to be the tri-industry licensing entity and administrator of the CSS technology.  Defendants’ continued misappropriation and dissemination of proprietary CSS technology threatens the existence of the DVD format and, thus, the very existence of DVD CCA. If the proprietary nature of the CSS technology is compromised, it will likely mean the end of this California business.

53.               The effect of the unlawful activities of the Defendants on the motion picture industry, centered in California -- as well as on the numerous California computer and consumer electronics businesses, including 73 companies in California of which there are 42 in Santa Clara County and an additional 17 in other Bay area locations -- is immeasurable.   Apart from the substantial resources that these industries have invested in the adoption of the DVD format, the wholesale copying and distribution of copyrighted motion pictures destroys the motion picture industry’s ability to protect its intellectual property and destroys the market for the computer and consumer electronics industries’ DVD-based products.

54.               In addition to the immediate consequence that copyrighted motion pictures have been pirated, the “hack” and disclosure of the CSS proprietary information has already had a very serious adverse effect on consumers, in California and elsewhere, in that the introduction of a related product -- DVD audio -- has been delayed.  The major music companies have indicated that they are not prepared to use a “compromised” system to protect their content and have insisted on the creation of a new technology and system.  The launch of DVD audio products, planned for December 1999, has, thus, been postponed for at least six months while new copy protection technology is developed, agreed upon, and implemented.

FIRST CAUSE OF ACTION

(Misappropriation of Trade Secrets)

55.               DVD CCA repeats and realleges the allegations of paragraphs 1 through 54 of this Complaint and incorporates them herein by reference.

56.               DVD CCA and its predecessors-in-interest have adopted reasonable measures as described herein to maintain the secrecy of the CSS information at issue.

57.               DVD CCA and its predecessors-in-interest, as well as companies in the motion picture, computer, and consumer electronics industry have invested substantial amounts of money and resources in the development of safeguards, such as the CSS licensing mechanism, to protect copyrighted material contained on DVD discs.  The CSS license and, in particular, how it protects the DVD technology, is of great commercial importance to DVD CCA and the motion picture, computer, and consumer electronics industries.

58.               The proprietary algorithms and/or “master keys” of the CSS are valuable proprietary property and trade secrets currently licensed by DVD CCA.

59.               Defendants knew or should have known when they posted the DeCSS program on their web sites or provided “links” to other sites posting this program, that such program was created through the unauthorized use of proprietary CSS information, which was illegally “hacked.”

60.               Defendants knew or should have known when they posted or “linked” to the DeCSS program that they were misusing confidential, proprietary information belonging to DVD CCA or one of its predecessors-in-interest and/or that their activities were improper because such program was designed specifically to enable users to defeat CSS encryption in order to illegally pirate DVD videos and, thus, was specifically aimed at infringing motion picture industry copyrights in the DVD contents.

61.               Defendants’ posting or “linking” to the DeCSS program on their web sites, with full knowledge of its unlawful purpose and despite notice of its infringing nature and demands to remove the same, constitutes the willful misappropriation of the CSS trade secrets at issue.

62.               As a result of Defendants’ misappropriation of its trade secrets, DVD CCA has suffered and continues to suffer irreparable injury, for which there is no adequate remedy at law.

63.               Defendants’ misappropriation of the CSS trade secrets was carried out in a willful, wanton and reckless manner in disregard of the rights of DVD CCA.

64.               Unless enjoined by the Court, Defendants will continue their misappropriation of the CSS trade secrets by continuing to post and “link” to the proprietary information on their web sites and plaintiff will continue to suffer irreparable harm.

PRAYER FOR RELIEF

WHEREFORE, DVD CCA prays for judgment:

1.           that Defendants have willfully misappropriated the CSS technology trade secrets;

2.           entering a temporary restraining order and preliminary and permanent injunctions, enjoining and restraining Defendants, their officers, directors, principals, agents, servants, employees, attorneys, successors and assigns, and all those acting in concert, combination or participation with any of them either directly or indirectly, singly or together, from making any further use or otherwise disclosing or distributing, on their web sites or elsewhere, or “linking” to other web sites which disclose, distribute, or “link” to any proprietary property or trade secrets relating to the CSS technology and specifically enjoining Defendants, its officers, directors, principals, agents, servants, employees, attorneys, successors and assigns, and all those acting in concert, combination or participation with any of them either directly or indirectly, singly or together, from copying, duplicating, licensing, selling, distributing, publishing, leasing, renting or otherwise marketing the DeCSS computer program and all other products containing, using, and/or substantially derived from CSS proprietary property or trade secrets;

3.            awarding to DVD CCA the costs of this action, reasonable attorneys fees, and such further and other relief as is found just and proper.

OF COUNSEL:

WEIL, GOTSHAL & MANGES LLP
ROBERT G. SUGARMAN*
JEFFREY L. KESSLER^*
EDWARD J. BURKE
JONATHAN S. SHAPIRO^*
767 Fifth Avenue
New York, New York 10153
Telephone:  (212) 310-8000
Facsimile:  (212) 310-8007

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