Transcript of Discovery Hearing, in MPAA v. 2600

NY; June 8, 2000

Source: h

See related files: (EFF Archive) (Cryptome Archive) (2600 Archive)

   2   ------------------------------x
   3   UNIVERSAL CITY, et al
   4                  Plaintiff,
   5              v.                           00 Civ. 277
   6   REIMERDES, et al
   7                  Defendant.
   8   ------------------------------x
   9                                           June 8, 2000
                                               4:30 p.m.
                            HON. LEWIS A. KAPLAN
                                               District Judge
  15        Attorneys for Plaintiff
       LEON P. GOLD
            Attorneys for Defendant


   1            (In open Court)
   2            THE DEPUTY CLERK:  All rise.
   3            THE CLERK:  Universal -v- Reimerdes.
   4            Is the plaintiff ready?
   5            MR. GOLD:  Ready.
   6            THE DEPUTY CLERK:  Is the defendant ready?
   7            MR. HERNSTADT:  Ready, your Honor.
   8            THE COURT:  So where are we?
   9            MR. HERNSTADT:  I'm Edward Hernstadt for the
  10   defendants.  Since we started the ball rolling on the
  11   discovery conference, I guess we'll start, we handed up to
  12   Ms. Reyes when we came to the courtroom, a two-page memo
  13   called discovery discussions.  We're all agreed we have to
  14   resolve the discovery, the disputes that are out there.
  15            The first thing I should tell you is that the
  16   parties, counsel for the parties actually get along very well.
  17   We have very pointed disagreements on the issues, on the law,
  18   on the scope of discovery, the timing of discovery.
  19            THE COURT:  I read that in the letter.  Let's go.
  20            MR. HERNSTADT:  We met yesterday for about three or
  21   four hours after the deposition, and we reached -- we made a
  22   lot of progress towards resolving a lot of discovery disputes.
  23   There are a few things that remain outstanding.  We're here to
  24   propose a solution.  I'll briefly frame the issues.
  25            On May 12th, your Honor issued an Order to move the


   1   trial from December 5th to July 17th, and the close of
   2   discovery from October to July 5th.  We now have 27 days left
   3   in discovery, that's including July 4th.  In the four weeks or
   4   the 27 days since your Honor's order, we have started five
   5   depositions.  We finished four of them.  The four depositions
   6   that are completed are subject to the resolution of certain
   7   privilege issues that have arisen.  We have gotten a lot of
   8   paper from the MTAA.  We started getting documents from the
   9   plaintiff.  We got some production today from three of the
  10   eight plaintiffs.
  11            We now have 27 days left to take eight to 10
  12   depositions.  The plaintiff wants to take depositions too,
  13   eight to 10 depositions.  We're going to California to take
  14   the DVDCAA deposition and review the documents out there.  We
  15   have witnesses to prepare and a trial to get ready for.  There
  16   has been a lot of delay in the past, we think.  We're prepared
  17   to move forward on that, and I think the parties have worked
  18   together very well to come up with a reasonable solution.  The
  19   first thing that has to happen is a decision on the discovery
  20   issues.  We're prepared to brief that on an expedited basis
  21   and get a decision.
  22            THE COURT:  Is that privilege issues alone or is that
  23   something else?
  24            MR. HERNSTADT:  I'm sorry.
  25            THE COURT:  Privilege alone or something else?


   1            MR. HERNSTADT:  It's an assertion of work product
   2   privilege, attorney-client privilege, joint interest or common
   3   interest privilege, that had been asserted in the deposition,
   4   I think in every deposition to date and also with respect to
   5   documents that we requested during the course of the
   6   deposition.
   7            THE COURT:  But they are all privilege issues that
   8   you're talking about?
   9            MR. HERNSTADT:  Yes.
  10            We cannot take some of the depositions we've agreed
  11   to take place until the privilege issue is resolved because
  12   there is no point.  We'd end up going back and deposing the
  13   people again.  What we've proposed to the plaintiffs is that
  14   they provide us with written objections and responses with
  15   respect to the documents that we requested in the course of
  16   the deposition.  They haven't been produced, and I think they
  17   have been -- they won't be produced because of privilege
  18   issues.  And the plaintiffs are going to work on that in the
  19   next few days.
  20            As soon as we get that, so we know the basis of the
  21   privilege sources, we will do a brief in five days.  They will
  22   take five days to do the opposition.  We would like two days
  23   for a reply and submit them to your Honor.  It's a pretty
  24   extensive motion in the sense that this case is a bit unusual.
  25   The DCSS appeared on the Internet, somebody discovered it.  We


   1   don't know who discovered it because that's privileged.
   2   Someone discovered it and someone looked at it and the lawyers
   3   got involved from day one, the plaintiff's have told us, and
   4   it makes sense in the context of this case.  Our contention
   5   will be that the lawyers are involved in an investigatory role
   6   or some other non-privileged role.  We do need to see the
   7   basis of the assertion of privilege before we can be more
   8   specific about it.
   9            What that means is a great deal of the initial,
  10   factual information about the initial discovery and
  11   plaintiff's response and investigations they conducted into
  12   the efficacy of DCSS into the effect of DVD movies that have
  13   been decrypted and placed on the Internet whether that works,
  14   essentially whether DCSS is a threat of piracy.  None of that
  15   information is available to us.  And I think we need that to
  16   prepare for trial and to present our case at trial.
  17            The problem is, Judge, we have 27 days and it's
  18   simply not possible to do all of the work that has to be done
  19   in that period.  We have to get a resolution of the privilege
  20   issues before we can do most of the depositions that are
  21   scheduled.  Then we have 20 depositions that both sides have
  22   to conduct.  There are a lot of documents.  There are a lot of
  23   witnesses to prepare.  Huge amount of work to do.  For
  24   example, just two days ago Mr. Sims said it's not possible, or
  25   that the lawyers need 15 days to designate deposition your


   1   Honor gave them 10 days, but 10 days to designate a
   2   deposition -- I think we need more than 27 days.
   3            THE COURT:  They don't need 10 days to designate
   4   depositions either.  There is a priority ordering here.  They
   5   can do it overnight.
   6            MR. HERNSTADT:  I understand that.  We need more than
   7   27 days.  We think we're on track with discovery.  I think
   8   we're working very well together.  In order for the defendants
   9   to get the discovery that we need, the discovery that we're
  10   permitted to get under the Federal Rules, we need more than 27
  11   days.  So we respectfully request an adjournment of the trial
  12   to October and discovery to September.
  13            THE COURT:  Mr. Gold?
  14            MR. GOLD:  Your Honor, good afternoon.
  15            I think that, as set forth in the letter, it does
  16   look like we're well on the road to resolving who is going to
  17   be deposed and when and for how long and when documents are
  18   going to be produced, and it is true --
  19            THE COURT:  The piece is finally breaking out here.
  20   Nothing like an imminent execution to concentrate the mind.
  21            MR. GOLD:  I found that last night, but I think you
  22   did focus us all on what needed to be focused on.  It happens
  23   every once in a while in the courtroom and the Judge does
  24   that, and I think you did it very well.  So we did all focus
  25   and tried very hard to focus, and I think we did finally a


   1   good job of it.
   2            Now, in this case we've already -- not already, by
   3   Friday we will produce 10,000 pages of the documents they have
   4   asked for.  We will be producing a couple more thousand next
   5   week.  I don't -- I don't know -- I don't actually know, but I
   6   would imagine there are very, very few, far less than 100 that
   7   are particularly relevant to the issues, because I don't think
   8   there are any factual issues.  That's what I want to say about
   9   the adjournment.  There is no question, they don't dispute, I
  10   believe, that there was circumvention here.  That they have
  11   been trafficking in a circumvention device.  That
  12   circumvention is a protective program that protects
  13   copyrighted material, they are trafficking in it.  They are
  14   not photographers, they are not doing reverse engineering.
  15   And, obviously, your decision on the preliminary injunctive
  16   focused on all of those issues.
  17            If there are fact issues, I don't think there are
  18   very many, they certainly wouldn't take more than one or two
  19   experts to really be presented to your Honor.  The more time
  20   that you give, more affidavits will be submitted on the law,
  21   the more depositions that will be taken, that are fascinating,
  22   but perfectly irrelevant to the case.
  23            I don't think there are any factual issues and I
  24   think the fastest way and most efficient way for all of us to
  25   deal with this is to keep the trial date and end it.  I think


   1   delay will only engender all sorts of irrelevancy and
   2   ridiculous expenses.  Therefore, I think we should keep the
   3   trial date.  What it will allow is for a continuation of what
   4   I respectfully submit has been a bit of a circus, and there is
   5   no point to it.
   6            I submit we ought to keep -- the date will also focus
   7   everybody on which of even these depositions are really
   8   useful.  We do need a privilege decision.  I would have
   9   scheduled it faster, because if you agree with us, then there
  10   is really no reason it will cut out I think about 60 percent
  11   of this.
  12            THE COURT:  You're the proponent of the privilege
  13   claim?
  14            MR. GOLD:  Yes, I am.
  15            THE COURT:  When can you make the presentation?
  16            MR. GOLD:  They are going to make the motion.  But if
  17   you want me to submit a brief on it, we could do it in four
  18   days.
  19            THE COURT:  So you have saved the day here.
  20            MR. GOLD:  Well, no.  They are first.  They are
  21   making this motion.
  22            MR. HERNSTADT:  Your Honor, we will do it in four
  23   days too, if necessary.  We prefer five days.
  24            MR. GOLD:  So you could say two.  But that's the
  25   decision.  If you are right, then there is not much to talk


   1   about.  Many of these names that we have agreed to produce, as
   2   counsel has agreed, would not be relevant, or they may be for
   3   one hour instead of a day, or a day and a half.
   4            So I think that your Honor is going to rule in favor
   5   of the privilege.  It's a work product, with the
   6   attorney-client privilege, primarily relating to the period
   7   after we discover DECSS.  There's nothing unusual or
   8   remarkable about it.  A trade group industry association was
   9   involved, and throughout, their lawyers represented these
  10   plaintiffs, in working with us on the litigation.  That's
  11   hardly new stuff.
  12            So I think this can be done easily, and everyone will
  13   focus a lot more on relevance issues and legal issues that
  14   have been raise,d, and we can try the real issues real quick
  15   and not waste a lot of time.
  16            THE COURT:  Who are the eight or ten depositions you
  17   want?
  18            MR. GOLD:  Well, there are the defendants or whoever
  19   else was involved in this company -- I'm not sure we know yet,
  20   so maybe that's two.  And whichever witnesses that they are
  21   going to put on as expert witnesses, and they're going to let
  22   us know really how many those are.  They submitted 18
  23   declarations.  I don't think they will have more than six.  So
  24   that may be OK.  But I don't know if they will have as many as
  25   six.  Right now I'm probably forgetting somebody very


   1   important, but I just can't think of anyone right now.  And
   2   because I don't think the factual issues are all that intense,
   3   I'm not talking about multiple days here.
   4            THE COURT:  All right.  So what you're talking about
   5   is the defendant or defendants and their experts.  That's what
   6   you want.
   7            MR. GOLD:  And any witnesses he tells us he is going
   8   to put on.  We have agreed that we will exchange witnesses
   9   lists as quickly as, what?  The 15th?
  10            MR. HERNSTADT:  I think we said the 19th.
  11            MR. GOLD:  19th, I'm sorry.  And that was my
  12   suggestion.
  13            MR. HERNSTADT:  But we will give names of witnesses
  14   we have struck out as soon as we can.
  15            MR. GOLD:  Then we won't subpoena them.  We have no
  16   interest in it.
  17            THE COURT:  Mr. Hernstadt, tell me who the
  18   depositions are that you want to take from this point on.
  19            MR. HERNSTADT:  The depositions of Mark Litvak, Greg
  20   Geazkner, Miguel --
  21            THE COURT:  Slowly.
  22            MR. HERNSTADT:  Sorry.  Mark Litvak.  Greg Geazkner,
  23   Mikhail Reider, M-i-k-h-a-i-l, R-e-i-d-e-r, Michael Eisner,
  24   Rick Hirsch, depending on what we learn in Mr. Hirsch's
  25   deposition, possibly Nathan Knight and Mike Ellis.  If


   1   Mr. Hirsch makes it clear that they're not going to tell us
   2   anything that he hasn't told us, we are prepared to cancel his
   3   deposition.  Possibly Todd Cohen, again.  Todd Cohen and Rich
   4   Taylor.
   5            We have the DVDCCA, two days of deposition.  There's
   6   a roomful of papers in Menlo Park that we have to go out there
   7   to review.  So there's a three-day event.  Dean Marks.  Brad
   8   Hunt possibly.  And, I'm sorry, with Todd Cohen and Rich
   9   Taylor, those are both possibly.  It depends on also the
  10   depositions, and you'll see in our discussions, there is a
  11   review of their depositions, and if they attest that they have
  12   nothing more to tell it us, we are considering disposing them.
  13            THE COURT:  You have more?
  14            MR. HERNSTADT:  Yes.  Michael Ostroff, which is also
  15   possibly.  Linda Sheer.  And then there are six plaintiff
  16   witnesses that were identified by Mr. Jacobson as being
  17   involved in antipiracy.  The plaintiffs have informed us that
  18   they basically have very little if anything to tell us.  We
  19   have agreed on number 4, on a procedure whereby they will
  20   review depositions and if they can satisfy us that they have
  21   nothing to tell us, then we won't take them.  Otherwise we
  22   will go out to California and take them in a gang.  But that
  23   would be two days and probably a third day just for travel
  24   back and forth.
  25            THE COURT:  Who is Litvak?


   1            MR. HERNSTADT:  Mark Litvak is the counsel for the
   2   antipiracy efforts of the MPA.
   3            THE COURT:  And what do you need his deposition for?
   4            MR. HERNSTADT:  He was involved in the entire
   5   investigation of DCSS.
   6            THE COURT:  That may be, but that hasn't answered my
   7   question yet.
   8            MR. HERNSTADT:  OK.  We need him to talk about the
   9   discovery of DECSS, the response of the MPAA and the members,
  10   what investigation did they undertake to discover what DECSS
  11   is, what did they do, did they test DECSS, did they see if it
  12   worked, did they see if it was effective, did they use it to
  13   decrypt a DVD, did they test a decrypted DVD to see if it
  14   could be placed on the Internet or to see if it could be
  15   stored onto any kind of storage media.  Was there a real
  16   concern here?  How far did they pursue those investigations?
  17   What did they do to people that they found posting to DECSS?
  18   Issues along those lines.
  19            THE COURT:  What about Geazkner?
  20            MR. HERNSTADT:  Geazkner has spoken publicly about
  21   this case.  We want to know the basis for this.  Mr. Geazkner
  22   is also a lawyer at the MPAA.  He has made public statements
  23   about copying, about fair use.  Or not necessarily fair use.
  24   There was a conference at Yale, and he stated there that -- to
  25   questions posed by members of the audience, that there was no


   1   evidence of any copying of DVD's using DECSS.
   2            THE COURT:  What do you think he's going to tell you
   3   that's any better than what he said at Yale?
   4            MR. HERNSTADT:  I would like to know the basis for
   5   that.  I would like to know what they did to find that out.
   6   And I'm also curious about what he said, that if some visual
   7   artist asked him whether they could choose a visual artist who
   8   said, what if I want to use a piece of a DVD in one of my art
   9   pieces, he said you take it from a VHS cassette.  It was
  10   pointed out that there is material that is found only on DVD's
  11   but not on the DECSS of the same movies, interviews with the
  12   director, out takes, story, filming the films, a variety of
  13   materials that are unique to DVD.  And when that was put to
  14   him, he said, you have to get a license.
  15            THE COURT:  How does that help resolve any issue in
  16   dispute here?
  17            MR. HERNSTADT:  I think, your Honor, you go to the
  18   heart of the matter.  Plaintiffs think that it is a very
  19   simple, straightforward case.  It is not.  When this case was
  20   a preliminary injunction case, the facts were very important,
  21   what people put on their Web sites, what they said on their
  22   Web sites.  There are DVD's, you can copy DVD's.  Take this
  23   utility, you can use it to copy.  Facts were very important.
  24   When they start with a detective lawyer, facts were very
  25   important.  Here are the threatening e-mails.  Here are the


   1   things that have happened to us.  But when it comes to the
   2   trial, they're saying, this is very simple.  There has been
   3   circumvention, we deny that there has been circumvention.
   4   This is a is circumvention device.  We're not sure about that.
   5   There has been trafficking.  We don't think that this
   6   constitutes trafficking in the statutory language.
   7            THE COURT:  But that's a legal issue.
   8            MR. HERNSTADT:  I understand.
   9            THE COURT:  What you did with the DVD, or the DECSS,
  10   is undisputed.  You put it on the Web site.  Now, that's
  11   trafficking or it's not trafficking.
  12            MR. HERNSTADT:  That's correct, your Honor.
  13            THE COURT:  It's not getting better or worse
  14   depending on what anybody said at Yale.
  15            MR. HERNSTADT:  There are other issues as well.
  16   Specifically, whether there is any harm.  We could make an
  17   argument that there has to be some kind of element of harm,
  18   that a utility has to pose some element of harm.  You can't
  19   just prohibit a utility if it doesn't do anything.  So what it
  20   does is relevant to that.  Has there been waiver?  Is this
  21   ripe?  There are a number of defenses where facts are quite
  22   important.
  23            THE COURT:  What I am understanding the thrust of
  24   your position to be, and I don't mean to state it completely,
  25   but certainly at the heart of it is the notion that DECSS was


   1   no real threat to their copyrighted material, at least in
   2   conjunction with the Internet, because even if it could be
   3   used as a step or more than a step in gaining access to and
   4   copying the DVD material -- and I think you dispute the second
   5   step, the copying part -- the file size would be so enormous
   6   that it couldn't practically be downloaded from the Internet
   7   anyway, at least in any quantity that's significant to
   8   anybody, and that they basically sold me a bill of goods when
   9   your clients in effect put up no defense on the facts.  Am I
  10   right about that?
  11            MR. HERNSTADT:  Your Honor, you are right insofar as
  12   you go.  That's one of the arguments.  There are other
  13   arguments, the reverse engineering defense --
  14            THE COURT:  We will come back to the others.
  15            MR. HERNSTADT:  Very good.
  16            THE COURT:  But I want to work through this.  Now,
  17   the question of whether DECSS in fact decodes or gains access,
  18   that's a yes or no question, to which you are going to have
  19   experts testifying, and they may disagree.
  20            MR. HERNSTADT:  Right.
  21            THE COURT:  But Michael Eisner and some of these
  22   other people are not going to add much to any of our knowledge
  23   of this subject.  Right?
  24            MR. HERNSTADT:  Not on that.
  25            THE COURT:  OK.  Whether whatever is decoded using it


   1   can then be copied falls into the same category.  It's a
   2   computer engineering question, right?
   3            MR. HERNSTADT:  I'm not sure.  But I imagine that
   4   that's something that experts will address.
   5            THE COURT:  All right.  The file size is going to be
   6   a technical question, a plain vanilla technical question.
   7   Right?
   8            MR. HERNSTADT:  Yes.
   9            THE COURT:  Transmission rates on the Internet for
  11            MR. HERNSTADT:  Your Honor, if I may, I think you're
  12   right about all that.  However, it is relevant whether they
  13   waived any kind of claim, by being aware of all this and not
  14   doing anything, or doing it in such a selective manner that
  15   they acknowledge that there's a threat here.  I think that
  16   their conduct is one of the issues that we were entitled to
  17   explore.  Federal rules gives us a broad latitude to seek
  18   discovery so long as such discovery is reasonably calculated
  19   to lead to admissible evidence.
  20            THE COURT:  I believe that has actually been changed.
  21   Am I not correct in that?  Don't the new rules of evidence
  22   actually narrow that?
  23            MR. HERNSTADT:  Your Honor, it's still fairly broad.
  24   It is not as broad.
  25            THE COURT:  It is still fairly broad.  But Rule 26


   1   also makes clear that the trial judge also has the right to
   2   limit discovery, whatever the technical scope is, by taking
   3   into account what the real issues in the case are and how
   4   important the incremental piece of discovery is to resolving
   5   the real issues.
   6            So it's not just as straightforward as you say.  This
   7   is not purely a question that you can go out to Seattle and
   8   depose Bill Gates on the theory that maybe he'll say something
   9   that helps you.
  10            MR. HERNSTADT:  Your Honor, none of the people that
  11   we are seeking to depose fall into that category.  Mr. Eisner,
  12   for example, just testified in front of Congress using
  13   materials that he --
  14            THE COURT:  I understand that.  And I'm not disputing
  15   your point.  I made a hyperbolic example to illustrate my
  16   point.  And the point that I was intending to illustrate was
  17   only that the fact that maybe some piece of discovery would
  18   produce something that somebody might regard as useful isn't
  19   the end of the discussion.  It is the beginning of the
  20   discussion.
  21            MR. HERNSTADT:  I understand.
  22            THE COURT:  So on the point that I identified, I
  23   think you and I agree that it's a matter for expert testimony.
  24   Now, going to your next point, what else is really at issue
  25   here?


   1            MR. HERNSTADT:  With respect to reverse engineering,
   2   you're going to have a combination of expert testimony and
   3   factual testimony.  And with respect to fair use, it's going
   4   to be mostly factual testimony.
   5            THE COURT:  Well, with respect to reverse
   6   engineering, is there any reason to suppose that the
   7   plaintiffs know anything about what your clients were doing
   8   when they posted DECSS?
   9            MR. HERNSTADT:  Yes.  The first thing they did is,
  10   according to Mr. Schumann, who is plaintiff's expert on
  11   that -- and by the way whose report has been designated as
  12   furnished and all the information --
  13            THE COURT:  Spare me the size.
  14            MR. HERNSTADT:  The first thing that the plaintiffs
  15   did was send Mr. Schumann a stack of printouts from the Linux
  16   postings, the Web site where people post messages back and
  17   forth, this thick.  Now, I've seen some of those postings, and
  18   some of those postings say things like -- the tiny, tiny, tiny
  19   minority say, you can use DECSS to decrypt a DVD.  Most of
  20   them talk about it in terms of what does it mean for the open-
  21   source movement, what does it mean in terms of the
  22   international project of creating a Linux or open-ended or
  23   open-source DVD player, which is a reverse engineer project.
  24   You're talking about the intraoperability between a DVD
  25   player, program, and an operating system, a Linux or BSD or


   1   other open-source operating systems.  DECSS was a step, a tool
   2   in the course of that reverse engineering.
   3            THE COURT:  What is the evidence that the defendants
   4   in this case were engaged in reverse engineering?
   5            MR. HERNSTADT:  The defendants don't have to be
   6   engaged in reverse engineering.  I think the question is, what
   7   is DECSS and what is its function?  If you post something that
   8   is a tool used in a reverse engineering project and that can
   9   be used to reverse-engineer a DVD player that will work on an
  10   open-source system, I don't think you're violating the DMCA.
  11   And at least that's an argument that I think we have to make,
  12   or are entitled to make, and I think it is a very persuasive
  13   argument.
  14            THE COURT:  It may be, but what I'm getting at, is,
  15   why did you need all this discovery?
  16            MR. HERNSTADT:  We need to know what they knew, and
  17   they knew this from the start and they proceeded to pick one
  18   or two people and sue them, I think that puts them in a very
  19   different position.  We can put a defense of waiver up, that
  20   they, by knowing that this is -- or a defense of unclean hands
  21   or something to that effect, that they knew that this was --
  22            THE COURT:  Waiver, of course, is the voluntary
  23   relinquishment of a known right.
  24            MR. HERNSTADT:  That's right.  The fact that they
  25   didn't go after anyone other than these three people, two of


   1   whom are gone now, the fact that they let 400, 300, 400 sites
   2   stay up and operating for at least a month, as where our
   3   clients posted, and for months and months thereafter, and
   4   since this case has been filed, they waited three months to
   5   make the linking motion.  They haven't gone after any of these
   6   other sites.  We don't post it anymore.  We have been enjoined
   7   from posting it.  There are 300 sites whose addresses they
   8   know, whose identities they know, and they don't do anything
   9   about it.  I think we're entitled to explore that.
  10            And by the way, we have limited it.  I mean, we
  11   noticed 25 depositions because we didn't know what these
  12   people would say.
  13            THE COURT:  I know.  Your original number was 5.
  14   Then it went to 30.  And now it's now gone back down.  It's
  15   like the stock market.
  16            MR. HERNSTADT:  Your Honor, may I just explain the
  17   five?  That was very clearly a misunderstanding.  What
  18   Mr. Garbus meant was, I can take five depositions and know how
  19   many I will need.  If you can find out how many people know
  20   something, who should I talk to, and if it's nobody, it's
  21   nobody.
  22            THE COURT:  That's what he said when it became clear
  23   I was going to give him five depositions in the trial.  When
  24   what he said before I got to that point was a little
  25   different.


   1            MR. HERNSTADT:  We talked about it.  That was the
   2   theory that we were working under.
   3            THE COURT:  Well, maybe so.  But it was not expressed
   4   that way.
   5            MR. HERNSTADT:  And every deposition that we've
   6   taken, like, for example, Mr. Jacobson, who is the designated
   7   deponent for the MPAA and for the plaintiff, told us, I don't
   8   know about this.  This is the person we talked to.  I don't
   9   know that technical stuff.  You have to go to Carol Ryder.
  10   She's the person I always talk to about technical stuff.
  11            We do not want to waste anybody's time.  Our clients,
  12   compared to the plaintiffs, have pockets about that big.  We
  13   want to get this done as officially as possible.  But we need
  14   to be able to prepare.  And we need to be able to put on a
  15   defense.
  16            THE COURT:  What else besides waiver?
  17            MR. HERNSTADT:  Well, I think the statutory defenses
  18   involve fact questions about fair use and what is fair use,
  19   what constitutes fair use.  It's not simply legal.  It's what
  20   kind of use.  And also encryption, the encryption exception.
  21            And then also the First Amendment defense.  That is a
  22   balancing, to some extent, a balancing question.  What is the
  23   value of this feature?
  24            THE COURT:  But the value of the feature you need
  25   discovery on like we all need a hole in the head.


   1            MR. HERNSTADT:  No, but it's also the value of
   2   talking about DECSS.
   3            THE COURT:  And you've got all the witnesses in the
   4   world at your fingertips on that.  You don't need the
   5   slightest bit of discovery.
   6            MR. HERNSTADT:  They are going to depose them all,
   7   and that takes up time.  This is not just a one-way street.
   8   We have the people we want to depose and we know what we want
   9   to get.  And we can get in and out.
  10            THE COURT:  I'm focusing right now on the depositions
  11   you want.  That's the list I started going down.  So I
  12   understand your point about waiver.  It's valid to a point.
  13   Next.  What's the next fact issue to which these depositions
  14   go?
  15            MR. HERNSTADT:  I'm sorry.  I'm not quite sure what
  16   you mean.
  17            THE COURT:  Well, you have given me a list here of
  18   the Litvak, Geazkner, Reider, Eisner, Hirsch, Knight, Ellis,
  19   Cohen, Taylor, DVDCCA, Marks, Hunt, Ostroff.  I want to know
  20   what the factual issues are with these people.
  21            MR. HERNSTADT:  Mr. Ostroff said that the DVD audio
  22   technology, the release of that was going to be delayed
  23   because of the threat of DCSS.  Where did he learn that?  What
  24   does he base that on?  What are the facts that led him to say
  25   that?


   1            THE COURT:  Who is he?
   2            MR. HERNSTADT:  Mr. Ostroff is from Universal, I
   3   believe, record company or something, the audio arm of
   4   Universal.  And Mr. Ostroff is a maybe, because we have talked
   5   to plaintiffs about getting some kind of, essentially, a
   6   statement from him or a representation or a written response.
   7   They are going to tell me how limited the information he can
   8   give us is going to be.  And if it's that limited, we won't
   9   waste his time or our time on the deposition.
  10            Same with Todd Cohen.  Same with Rich Taylor.  The
  11   depositions that we think we absolutely have to have are
  12   Litvak, Geazkner, Ryder, Eisner, or Sanford Litvak, Rick
  13   Hirsch, Linda sheer -- although we may not take that one,
  14   because she's got health problems and, again, we were informed
  15   that she has limited knowledge, and maybe we can get that
  16   limited knowledge in a different way.  And Dean Marks.  And
  17   the DVDCCA, I think.  I'm doing that from reading this sheet.
  18   I don't want to promise that --
  19            THE COURT:  I understand.
  20            MR. HERNSTADT:  And a lot of the other depositions
  21   that are on this list, you will note that we have come up with
  22   alternative ways of getting the information.
  23            THE COURT:  No, I do.  And I don't want to be
  24   misunderstood.  I couldn't be happier at the progress you have
  25   made since Tuesday.


   1            MR. HERNSTADT:  Remarkable.
   2            THE COURT:  It is remarkable, and I am prepared to
   3   acknowledge that it is remarkable.  And I appreciate that.  It
   4   is real progress.  On the other hand, I want to keep that
   5   going.  I certainly know that, in 1992, in an analogous
   6   situation of an accelerated trial, Judge Ward gave me and my
   7   adversary about five and a half weeks to get ready for trial,
   8   and we did 44 depositions in that period of time.  And the
   9   factual issues were comparable not in terms of substance but
  10   in terms of how many and the level of difficulty.
  11            It can be done.  I know it can be done.  I've done
  12   it.
  13            MR. HERNSTADT:  Well, I hope your Honor remembers the
  14   experience well enough not to want to inflict it upon us.
  15            THE COURT:  Well, to tell you the truth, it wasn't
  16   that bad.
  17            MR. HERNSTADT:  Oh, no.
  18            THE COURT:  It's doable.
  19            MR. HERNSTADT:  Of course it's doable.  Well, I would
  20   say, of course it's doable.  I think for us --
  21            THE COURT:  Ms. Miller says, that's easy for me to
  22   say.  I know that.  Mr. Gold is not going to lose any sleep.
  23            MR. HERNSTADT:  I think the truth is, for us it is
  24   virtually essentially impossible to prepare adequately in that
  25   period of time.  We do not have the same resources as the


   1   Proskauer firm.  I hate saying that, but you look at the book
   2   and it's true.
   3            THE COURT:  But yours is still a pretty
   4   substantial-size law firm too.  And it's not like you come to
   5   this with a lack of experience either.
   6            I am certainly not today prepared to alter the
   7   schedule.  Let's see how it goes.  We're going to get this
   8   privilege thing on very quickly, unless it requires something
   9   that I don't anticipate.  You should have a very quick
  10   decision on it, and depending how it goes, it may shorten the
  11   discovery, which is not to suggest I'm going to call it in a
  12   way to shorten discovery for that reason.  It just may.
  13            So I'm not going to do it now.  Now let's talk about
  14   this privilege thing.  Today is Thursday.  Plaintiffs can file
  15   Monday.  Right?
  16            MR. HERNSTADT:  Your Honor, is this going to be
  17   plaintiff's motion?  I think this is our motion.
  18            MR. SIMS:  It was going to be defendants' motion.
  19            THE COURT:  You want to make a motion?  You want to
  20   file Monday?  Here I was giving you a break.
  21            MR. HERNSTADT:  Well, they have to provide us with
  22   the basis for the privilege.  I don't know how long --
  23   whatever they --
  24            THE COURT:  But, look, they're asserting the
  25   privilege.  The reason that I suggested that they should file


   1   first it is that they have the burden of establishing it.  So
   2   I am giving them until Monday to establish it and to put in
   3   their papers as to why the stuff is privileged.  You want that
   4   or do you want to go first?
   5            MR. GARBUS:  Let them go first.
   6            THE COURT:  Mr. Garbus got it.
   7            MR. HERNSTADT:  No, I understand.  If they go first,
   8   they go last.
   9            THE COURT:  Ah, now we're getting down to the nitty
  10   gritty.
  11            MR. GARBUS:  But he's ahead of me, way ahead of me.
  12            MR. HERNSTADT:  But additionally, we still haven't
  13   gotten from them, for example, Mr. Schumann's deposition, we
  14   are asked for a lot of papers.  We sent him a letter that day,
  15   the 15th of May.  The response was due the 24th of May.  We
  16   haven't gotten it.  We have worked that out.  That's history.
  17   We're moving forward.  I would like to get to written
  18   responses so that we can make a motion to compel.
  19            THE COURT:  But suppose you get the response and you
  20   get his showing by briefs and if necessary affidavits as to
  21   why he says it is privileged, and then you answer it.
  22            MR. HERNSTADT:  Would we be permitted a surreply on
  23   one day --
  24            THE COURT:  I don't know.  Privilege, unless you want
  25   to accept the burden on this --


   1            MR. HERNSTADT:  No, sir.
   2            THE COURT:  Normally the party with the burden goes
   3   first and last, right?
   4            MR. HERNSTADT:  Well, if it's a motion to compel,
   5   then they have to prove --
   6            THE COURT:  Maybe it's a motion for a protective
   7   order?
   8            MR. HERNSTADT:  Is it going to be a race to the
   9   courthouse?
  10            THE COURT:  I don't think so.
  11            MR. SIMS:  Your Honor, Mr. Hernstadt wants to make a
  12   motion.
  13            MR. HERNSTADT:  We also have our brief due on
  14   Wednesday for the reply brief in the linking motion.
  15            THE COURT:  You want to toss a coin or something?
  16            MR. GOLD:  Ed, what do you want?  We'll do what you
  17   want.
  18            MR. HERNSTADT:  After you.  What do you want?  You
  19   want to make a motion, we'll make a motion?
  20            MR. GOLD:  Perhaps if I can speak a sentence or two
  21   about this mysterious privilege.  The big part of it is, we
  22   learned about DECSS and the seven plaintiffs working through
  23   the MPAA, which has a lot of lawyers which represent them on a
  24   lot of things, including this, and then with us, after we were
  25   retained, we started to work on what's going on, what is this


   1   thing, what experts can we talk to, who should we sue, what's
   2   happening on the Internet.  Sounds like work product to me,
   3   because all the lawyers are getting ready for it, this
   4   lawsuit.  And that's the biggest part of it.
   5            Now, following that up, there were communications
   6   between the lawyer members of the plaintiff, who sit on the
   7   appropriate committee at the MPAA, who talked to their clients
   8   in-house, their in-house lawyers, that talk to their clients,
   9   following up on programs and plans and ideas about the
  10   litigation.  Communications with Proskauer.  I don't know if
  11   I've left out one category.  There is nothing -- everybody was
  12   working on this litigation.
  13            Now, there are a couple of letters that precede
  14   finding out about DECSS, which are just lawyers writing to
  15   clients soliciting legal advice.  So that's a category also.
  16            I think those are the mysterious attorney-client work
  17   product privileges that we assert.
  18            All of these documents that we are going to list on a
  19   list for them, as we have to do under the rules, relate to
  20   those categories of things.  Are there two pieces of paper,
  21   probably irrelevant, that we can't claim the privilege on?  I
  22   don't know that.  Carla, I don't know that.  Are there any?
  23   Are there any in that period that we don't have a privilege
  24   claim about?
  25            MS. MILLER:  Sure.


   1            MR. GOLD:  If we don't have it, we're not going to
   2   assert it.
   3            There are some.  So we are going to be producing some
   4   documents that Ms. Miller has decided are not privileged.  But
   5   those are the privilege claims.  I don't know what else.
   6            THE COURT:  So take your time, Mr. Hernstadt, and
   7   tell me why they are not going to succeed in it.
   8            MR. HERNSTADT:  Well, I think there's probably a
   9   couple of documents they will succeed on it and we won't
  10   challenge, but all of this took place in the course of an
  11   investigation.  There are two reasons.  One is the MPAA
  12   antipiracy office is an investigatory office.  This thing hits
  13   the net and they do what they do.  They investigate it.  There
  14   are lawyers there who participate in the investigation.  They
  15   got to figure out, what is this thing, what does it do, is
  16   this something that we need to be concerned about?  How does
  17   it work?  They need to explore all of that.  That's a standard
  18   investigation they do with anything.  They do it with DivX.
  19   They do it with any kind of thing that hits the market.  And
  20   we are entitled to that.  At a certain point, it moves from
  21   investigation to litigation.  And maybe that's when they can
  22   assert the privilege.
  23            I think we can also show that this investigation
  24   segues directly into the litigation.  They are litigating that
  25   which they investigated.  If we can't get that information,


   1   then we have no idea what the basis of their claims are.
   2            THE COURT:  Mr. Gold, let's change the factual
   3   assumptions here for a minute.  Suppose this were a trademark
   4   infringement case and the question was, who is out there
   5   selling counterfeit goods and why do we think they are
   6   counterfeit.  One way of approaching that might be to send out
   7   a private investigator.  The private investigator would come
   8   back and report to somebody and explain what he found.  Then
   9   the recipient of that information might consult their lawyer
  10   and share the information.  The lawyer might give legal
  11   advice.  There might be a suit.  Is it crystal clear on those
  12   facts that what the private investigator found is privileged?
  13            MR. GOLD:  It's not crystal clear to me as I stand
  14   here, but that is not the situation.  What happened was, when
  15   we found out about this at night or in the morning, we
  16   understood, we found out that it circumvented DECSS and that
  17   you could get access to the copyrighted material.  And then
  18   everyone decided they were going to sue.  They wanted to find
  19   out things to develop that lawsuit, yes.  It was a work in
  20   anticipation of litigation.  It's a different situation.
  21   That's what happened.
  22            MR. HERNSTADT:  Actually, I'm not sure that's exactly
  23   what happened, because we haven't been able to depose the
  24   people who were meeting then.  What we do know from
  25   Mr. Schumann's deposition is that right about that time he was


   1   hired by the MPAA to figure out what this was.  And they sent
   2   him a stack of postings from the Internet.  He went through
   3   all the postings.  He's their expert witness on the technical
   4   half of it.  He went through their postings.  He looked
   5   through the Internet.  He wrote a report, which we sent to
   6   them.  There were notes taken on them and then he wrote and
   7   filed a report, which was sent to them too.  They are claiming
   8   privilege on all that stuff.  That's clearly investigatory.
   9   At least we think it is.
  10            THE COURT:  That may not be a total answer either,
  11   because, for one thing, even if you divorce it from legal
  12   advice, it may be material prepared in anticipation of
  13   litigation.
  14            MR. HERNSTADT:  I understand that.  I think that it's
  15   different from that.  I think that this is an investigatory
  16   division of the MPAA.  That is what they do.
  17            THE COURT:  But why would that matter?
  18            MR. HERNSTADT:  Because they are doing their job.  If
  19   their job is to investigate to find out what something is,
  20   that's not necessarily in anticipation of litigation, you
  21   know, it may lead to litigation.  It may not.  But this is
  22   their job.  They're doing their job.  There are a number of
  23   cases, none of which I can cite to you right now.  But we are
  24   prepared to make this argument.
  25            MR. GOLD:  Your Honor, this witness has not yet


   1   actually right now we are much further along with our
   2   knowledge that he is going to be our expert.  We did not have
   3   that knowledge when we produced him.  We understand that if we
   4   select him as our expert they have a right to depose him, as
   5   we have agreed to, and they have a right to all the things one
   6   must give under the rules if one is putting on an expert.  And
   7   we will follow the rules.
   8            THE COURT:  All right.  Well, look, obviously I can't
   9   resolve this now.  It seems to me in all the circumstances it
  10   makes sense for the plaintiffs to go first and to put in their
  11   showing, and, Mr. Gold, it ought to be reasonably apparent to
  12   you what the issues are that needs to be covered from a
  13   factual basis.  What were they doing?  Was it in anticipation
  14   of litigation?  What relationship did it have to legal advice?
  15   On all of which you have the burden.  And Mr. Hernstadt, you
  16   obviously know what the issues you have to address are.  Why
  17   is there any reason to suppose that, even if it was
  18   investigative, it was not in anticipation of litigation or
  19   indeed a situation no different from where a lawyer hires
  20   somebody in connection with giving advice or preparing a
  21   litigation to advise the lawyer?  So that I think the lines
  22   are pretty clearly drawn and you ought to be able to do it.
  23            So we'll get your papers, Mr. Gold, by Monday.
  24            MR. GOLD:  Your Honor, may I just say a word on that?
  25   The brief is not our problem.  The problem is all the


   1   affidavits that we need to get out.  Tomorrow is Friday and
   2   then there is a weekend, not for us but for the people who we
   3   are trying to get hold of, and it might be doable, but it
   4   might also be hard.  So we are talking maybe by Tuesday late
   5   if I could submit those affidavits.  If you want the brief --
   6   but it would be nice to know exactly what's in the affidavits
   7   before we wrote the finalized --
   8            THE COURT:  We can see how that might be true.  It's
   9   always nice to know the facts before you --
  10            MR. HERNSTADT:  We're happy to let them submit it
  11   Tuesday.
  12            THE COURT:  So you will have until Tuesday.  And if
  13   today is Wednesday and you want until Tuesday, then you will
  14   get to the next Monday.
  15            MR. GOLD:  Is today Thursday?  I think it's likely
  16   I'm wrong, because I've got a --
  17            THE COURT:  Believe me, I've lost track of time.  I
  18   had a vacation last week but I can't remember.
  19            MR. GOLD:  Judge, if you say it's Wednesday, it's
  20   Wednesday.
  21            THE COURT:  What day is it?  Today's Thursday.  All
  22   right.  So you get them in the following Monday anyway.
  23            MR. HERNSTADT:  Thank you, your Honor.
  24            THE COURT:  I'm not going to read it on Sunday.
  25            MR. GOLD:  Thank you, your Honor.


   1            THE COURT:  OK.  And then, Mr. Gold, any response
   2   from you by Wednesday.
   3            MR. GOLD:  Yes, your Honor.  And I will do my very
   4   best to decide it immediately.
   5            OK.  Anything else we can usefully accomplish?  And I
   6   must say that this is maybe the first useful such gathering of
   7   the case.
   8            MR. HERNSTADT:  No, sir.
   9            THE COURT:  OK.  Good.
  10            MR. GOLD:  Your Honor, that's another example.  You
  11   can teach a couple of old dogs at least one new trick.
  12            THE COURT:  I wouldn't refer to either one of you as
  13   old dogs.  Perish the thought.
  14            OK.  Thank you, folks.
  15                                o0o