Moreover, information posted on some of the defendants’ web sites establishes that they were and are fully aware that, in posting the DeCSS program, they are wrongfully appropriating 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, 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” and mocking the “trained weasels you call lawyers[;]” and

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

(AA 15, 50).

VI. The Instant Action And Proceedings Below

On December 27, 1999, DVD CCA commenced the instant action in the Superior Court of the State of California, County of Santa Clara, seeking injunctive relief barring defendants from misappropriating CSS trade secrets. DVD CCA brought an ex parte application for the issuance of a Temporary Restraining Order and Order to Show Cause Re: Preliminary Injunction on December 28, 1999 to stop the defendants who have been able, through the theft of proprietary information and trade secrets licensed by DVD CCA, illegally to copy and distribute the most valuable assets of the motion picture industry — its copyrighted motion pictures stored on DVDs. (AA 50-55). DVD CCA asserted that unless enjoined, defendants’ actions would allow wholesale additionalinfringement and would cause irreparable injury to (i) DVD technology, (ii) plaintiff DVD CCA (which is the sole licensor of the trade secrets which are being stolen), (iii) the motion picture industry (which is primarily located in California), 3 and (iv) the more than 400 licensees of the CSS technology through DVD CCA (73 of which are located in California) [FOOTNOTE 3]who have invested millions of dollars and employ thousands of people creating the hardware and software necessary to access the digital images on DVDs.(AA 35, 45).

On December 29, 1999, the Honorable William J. Elfving — after hearing the parties during a lengthy oral argument — denied DVD CCA’s request for an ex parte temporary restraining order, set a briefing schedule to allow for the parties to prepare the extensive legal and factual submissions that have become the record in this action, and set a preliminary injunction hearing for January 14, 2000. (AA 162-65). Afteranother extensive oral argument session and careful consideration of the parties’ submissions which near 1000 pages, on January 21, 2000, the lower court granted, in part, DVD CCA’s request for preliminary injunctive relief (the “January 21, 2000 Order”). (See AA 712-16).

In his decision, Judge Elfving held:

1) that “Plaintiff has shown that the CSS is a piece of proprietary informationwhich derived its independent economic value from not being generally known to the public” (AA 713);

2) that “Plaintiff made reasonable efforts under the circumstances to maintain itssecrecy” (AA 713);

3) that “the evidence is fairly clear that the trade secret was obtained throughreverse engineering” (AA 713);

4) that “[t]he circumstantial evidence is quite compelling on both the issue of Mr. Johansen’s improper means [to obtain plaintiff's intellectual property] and that Defendants’ knowledge of impropriety” (AA 714);

5) that “the harm to the Defendants [from the entry of the injunction] is truly minimal;” (AA 714); and

6) that “the current and prospective harm to the Plaintiff, if the Court does not enjoin the display of their trade secret, will be irreparable.” (AA 714). [FOOTNOTE 4]

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