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COURT OF APPEAL OF THE STATE OF CALIFORNIA SIXTH APPELLATE DISTRICT DVD COPY CONTROL ASSOCIATION, INC., Plaintiff-Respondent, v. ANDREW BUNNER, Defendant-Appellant. Appeal from the Superior Court of the State of California, County of Santa Clara, Honorable William J. Eifving, Presiding Judge Case No. CV-786804 BRIEF OF RESPONDENT DVD COPY CONTROL ASSOCIATION, INC. WEIL, GOTSHAL & MANGES LLP JARED B. BOBROW (Bar No. 133712) 2882 Sand Hill Road Menlo Park, CA 94025 Telephone: (650) 926-6200 Facsimile: (650) 854-3713 767 WEIL, GOTSHAL & MANGES LLP JEFFREY L. KESSLER* ROBERT G. SUGARMAN* EDWARD J. BURKE (Bar No. 103414) JONATHAN S. SHAPIRO* Fifth Avenue New York, NY 10153 Telephone: (212) 310-8000 Facsimile: (212) 310-8007 Attorneys for Plaintiff-Respondent DVD COPY CONTROL ASSOCIATION, INC. *Admission papers being submitted to the Court. [ edited for Web publication] INTRODUCTION Appellant’s argument is almost entirely based on a claim that the First Amendment somehow immunizes his publication of stolen trade secrets. Yet, as demonstrated below, there is no First Amendment right to steal another’s trade secret just as there is no First Amendment right to infringe another’s copyright or trademark. Courts have been routinely enjoining such activity for decades. As the lower court correctly observed, this case is (and always has been) about theft of intellectual property — namely proprietary information and trade secrets embodied in encryption/decryption technology called the Content Scramble System (“CSS”). CSS, which is licensed by plaintiff-respondent DVD Copy Control Association, Inc.(“DVD CCA”), protects the copyrighted motion pictures stored on digitalversatile or digital video discs (“DVDs”). (RA 8, 23, 24; RA 4, 8-11). [FOOTNOTE 1] As DVD CCA has demonstrated preliminarily and will establish at trial, the proprietary information at issue was obtained by willfully “hacking” and/or improperly reverse engineering software created by a CSS licensee in violation of a software licensing agreement. (RA 9, 27). A computer program was then created called “DeCSS,” which utilizes, is substantially derived from andor discloses the misappropriated CSS trade secrets. This program defeats the CSS encryption/decryption technology and allows one illegally to gain access to and copy copyrighted motion pictures contained on DVDs. Defendants, such as defendant-appellant Andrew Bunner (“Bunner”), posted the DeCSS program on their Internet web sites knowing or having reason to know that the DeCSS program contained CSS trade secrets and was created by virtue of the unauthorized use of CSS trade secrets. The trial court acted well within its discretion in entering a preliminary injunction after determining: (1) that DVD CCA is likely to prevail on the merits of its trade secret misappropriation action in that (a) the proprietary information at issue is entitled to trade secret protection and (b) the CSS trade secrets were misappropriated; and (2) that the harm to DVD CCA from the continued misappropriation of the CSS trade secretsoutweighed the harm to the defendants in removing the program containing the misappropriated CSS trade secrets from their web sites. Mindful of the First Amendment concerns raised by defendants, the court made clear that “[n]othing Ln this Order shall prohibit discussions comment or criticism, so long as the proprietary information identified above is not disclosed or distributed.” (AA 716 (emphasis added)). The appellant’s continuing attempt to rely on flawed FirstAmendment arguments which are inconsistent with long-established intellectual property law principles, suggests that he is simply unable to contest the record evidence establishing that he and the other defendants have misappropriated CSS trade secrets. Indeed, his argument on the merits of the trade secret claim seems to be an afterthought, merely tacked on at the end of the brief. STANDARD OF REVIEW ON APPEAL This Court must not upset the lower court’s decision absent a finding that the trial court abused its discretion in enjoining the defendants from misappropriating CSS trade secrets. IT Corp. v. County of Imperial, 35 Cal. 3d 63, 69 (1983). California courts have cautioned that a finding of abuse of discretion is only appropriate in the rare instances when a trial court’s decision has “exceeded the bounds of reason or contravened theuncontradicted evidence.” Continental Baking Co. v. Katz, 68 Cal. 2d 512, 527 (1968); City of Los Altos v. Barnes, 3 Cal. App. 4th 1193, 1199 (Cal. Ct. App. 1992). Further, the party challenging the issuance of the injunction has the burden to make a clear showing of the lower court’s abuse of discretion. IT Corp., 35 Cal. 3d at 69; City of Los Altos, 3 Cal. App. 4th at 1199; see also Abba Rubber Co. v. Seaquist, 235 Cal. App. 3d 1 (Cal. Ct. App. 1991) (trial court did not abuse its discretion in finding thatpreliminary injunction was justified based on the plaintiff’s showing that its customer list was a trade secret and its former employees, working for a competitor, were contacting customers on its customer list). STATEMENT OF FACTS I. Background Of DVD Technology DVDs represent the next generation of technology for the motion picture, computer and consumer electronics industries. Just as compact discs (“CDs”) have replaced records, DVDs are replacing videotapes. DVDs provide higher quality images than videotapes and are digitally formatted on a convenient 5-inch disc that is resistant to wear and damage and allows for attractive consumer features not presently available in other video formats. Unlike videotapes, the quality of the image on a DVD does not deteriorate when copies are made. Because the quality of the images does not deteriorate when copied, encryption is essential to prevent copying of the copyrighted material on the DVD. (RA 3, 5; RA 4, 8). DVDs containing motion pictures in encrypted form can be played either on special purpose machines (“DVD Players”) or on personal computers (“PCs”) with DVD drives. To play a copyrighted motion picture which has been encrypted, either form of player device requires the implementation of certain algorithms and “master keys” to carry out the decryption of the data stored on the disc. The implementation that allowsfor this decryption function is developed by DVD CCA’s licensees using detailed specifications which are provided by DVD CCA to such licensees under the CSS licensing system. (RA 3, 5; AA 9, 30). II. Background Of CSS Technology Before allowing their copyrighted motion pictures to he used on the DVD format, the major motion picture companies insisted on a viable copy protection system to prevent users from making copies of their digital motion pictures. Such protection is necessary to prevent copying DVD CCA’s Respondent’s Brief 4.from discs that are rented or borrowed and also 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. Without motion picture companies’copyrighted content for DVDs, there would be no viable market for computer DVD drives and DVD players, as well as the related computer chips and software, which run these devices and, thus, there would be no DVD industry for video applications. (AA 62-63, 5-6; RA 3-4, 6-8; AA 9, 31-32). Without copy protection, the major motion picture companies would not have agreed to distribute their motion pictures onDVDs. (AA 9, 31; AA 63, 6). CSS is proprietary trade secret technology that was developed to provide the protection demanded by the motion picture companies against unauthorized copying of their copyrighted material. DVD CCA is the sole, duly authorized licensor for the CSS technology. Any party desiring lawfially to use the CSS technology must do so through a license issued by DVD CCA. (RA 4-5, 10-13; AA 10, 33 ) . Beginning on or about October 31, 1996, DVD CCA’s predecessor-in-interest began licensing CSS technology to hundreds of licensees, pursuant to an agreement that later became the AMENDED AND RESTATED CSS INTER/M LICENSE AGREEMENT, including the related CSS PROCEDURAL AND AMENDED AND RESTATED TECHNICAL SPECIFICATIONS (collectively, the “CSS Agreement”).(AA 505-37). The CSS Agreement sets forth the conditions under which the CSS licensing entity (currently DVD CCA) would grant licenses to, among others, manufacturers of DVD players, DVD drives and related hardware and software. Licensees were granted the right to use the security DVD CCA’s Respondent’s Brief 5.system on DVD products and agreed to safeguard CSS technology from public disclosure. (RA 5-7, 14-19; AA 10, 34). The CSS Agreement gives licensees the right to use the technology and provides the necessary descrambling technology and “master keys” to do so. The trade secrets are not accessible to unlicensed third parties because they are incorporated in hardware devices — chips — or made tamper resistant if distributed in the form of actual software, The trade secret technology cannot be accessed 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. Each DVD contains, in a part of the disc not normally read by the player device, a file containing the “master keys.” The system will not operate unless the “key” contained in the licensee’s decryption software matches one of the keys stored on theDVD. (RA 5-6, 15; AA 10, 35). The CSS Agreement requires licensees to maintain the confidentiality of certain defined pieces of information, such as the proprietary algorithms and “master keys” and, as such, licensees are subject to a stringent set of rules to maintain confidentiality within the group of licensees. (AA 63, 6; RA 6-7, 16-19). III. Creation Of Tri-lndustry CSS Licensing Entity DVD CCA 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 business (motion picture, computer, and consumer electronics companies) recognized that thelicensing of CSS technology ought to be controlled and administered by the DVD CCA’s Respondent’s Brief 6.companies in the three industries together and that the costs associated with such critical intellectual property protection should be borne by thehundreds of companies involved in the DVD business. (RA 7-8, 20-21; AA 12, 40). Thus, the DVD Copy Control Association, Inc. was formed in December 1998. [FOOTNOTE 2](RA 8, 22; AA 13, 42). 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 format. Additionally, DVD CCA was given direct rights to enforce the CSS Agreement. (RA 8, 24; AA 13, 44). IV. Misappropriation Of CSS Technology On or about October 25, 1999, the source code of a program named DeCSS appeared on an Internet web site operated by Jon Johansen, a Norwegian citizen. (AA 63, 7; RA 8-9, 25; AA 225, 6). The DeCSS program embodies, uses and/or is a substantial derivation of trade secrets which DVD CCA licenses under the CSS Agreement. (AA 712; AA 225, 5). This proprietary information was obtained by willfully “hacking” and/or improperly reverse engineering software created by CSS licensee Xing Technology Corporation (“Xing”) in violation of Xing’s software licensing agreement. (AA 479-8 l, 3-5). Xing’s software is and was licensed to users under a license agreement which specifically prohibits reverse engineering. (RA 9, 27; AA 340-43). Bunner’s declarant Frank A. Stevenson confirmed that the original posting of DeCSS occurred on October 25, 1999. (AA 226, 14). Moreover, tests on this original posting, which was provided by Bunner’s declarant, confirmed that the Xing “master key” was the vehicle through which hackers stole CSS trade secrets. (AA 479-81, 3-5). Access to the Xing software and, thus, to the CSS technology could only be obtained byviolating Xing’s software license agreement which prohibits reverse engineering (AA 340-43). V. The Defendants, Including Bunner, Have Misappropriated CSS Trade Secrets Knowing Or Having Reason To Know That They Were Improperly Obtained Numerous news accounts and extensive discussions among computer hackers on Internet web site discussion groups, including the Slashdot.org web site — the hacker discussion group on which Bunner admits he learned about DeCSS just one day after its original posting (AA 287, 3-4) — demonstrate that defendants, including Bunner knew, or had reason to know, that DeCSS was created by willfully misappropriating CSStechnology. (See AA 348-65). Some examples of Slashdot postings include:
- The Law? F**k the law. Someone will do it regardless and post it to USENET and tip servers in countries where US law is meaningless, and the SW will spread and no one will be able to stop it. The secret nature of DVD decoding is already doomed and has been since day one when software was released to do it. If they really wanted to keep it secret, they’d have had a better chance if they kept all the decoding in hardware. But it’s too late now. The genie is out of the bottle. (AA 348, 18); – My impression is that the decryption algorithms for DVD are kept as a big secret to prevent movie piracy (which as most of us know is becoming the next big thing on the net). (AA 348, 19); – There is an incorrect perception that copyright and patent and RE [reverse engineering] laws are universal. They are not. If someone in say, Taiwan, or some other non-Berne non-WIPO country REs [reverse engineers] the code and posts it to the DVD CCA’s usenet, how is this illegal? Now I suppose it’s illegal for Jo[e] US citizen to download and use this code, but the genie will be out of the bottle so to say, and it will then be impossible to suppres [sic] the knowledge anymore. (AA 348, 20); – Yes, it is true, we have now all the needed parts for software decoding of DVDs, but any software doing so will be illegal and/or non-free….CSS — The information about CSS is obtained by reverse engineering some DVD software decoder. Reverse engineering as , nearly everytime prohibited by license agreements, and for example european law allows reverse engineering only for software compatibility issues. So the CSS source was not obtained in a legal way, and it is at least a very problematic issue if we may use this source however. (AA 349, 21); – The anonymous source (who isn’t entirely anonymous, as far as I know, as he made himself known on other forums), will be at the most risk here for legal problems. Best idea now is to download the code. Get it spread around as widely as possible. It may not be able to be used legally when all is said and done, but at least it will be out there for others to work with. (AA 349, 22); – I don’t see how Reing [reverse engineering] the CSS mechanisms in a DVD player would be considered legal. You are not maintaining any kind of compatibility. (AA 349-50, 24); – Evil people have gone out of their way to make it hard for us to play them [DVDs]. (AA 351, 31); – Why am I obligated to not copy their product just because I don’t respect them enough to pay for it? I am violating another persons righ [sic] to profit off hte [sic] use of hteir [sic] intellectual property? Well that is exactly my point, intellectual property is an abomination. (AA 351, 32); and – It’s important to note that the software we’re talking about is probably completely illegal. Unless these guys paid for a license to the descrambling program, they’re breaking the law. It doesn’t matter how they got that algorithm, it’s still not their intellectual property. (AA 351, 33).

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]

ARGUMENT I. DEFENDANTS HAVE NO FIRST AMENDMENT RIGHT TO DISSEMINATE CSS TRADE SECRETS Bunner is simply wrong when he asserts that the lower court “disregard[ed] his constitutional injury” (App. Mem. at 15 n.8) or “blatantly failed to respect the constitutional injury … in denying [Bunner] the right to publish DeCSS.” ( Id.at 18). Rather, the court below properly recognized that defendants’ misappropriation of CSS trade secrets was not protected by the First Amendment. In analyzing the relative harm to the parties, the lower court — clearly mindful of the First Amendment concerns raised — explained:

At this point in the proceeding, the harm to the defendants is truly minimal. They will simply have to remove the trade secret information from their web sites. They may still continue to discuss and debate the subject as they have the past in both an educational, scientific, philosophical and political context.

(AA 714 (emphasis added)). Indeed, in the final paragraph of the January 21, 2000, Order, the court below again specifically alluded to defendants’ legitimate First Amendment rights, proclaiming: “Nothing in this Order shall prohibit discussion, comment or criticism, so long as the proprietary information identified above is not disclosed or distributed.” (AA 716). Appellant’s argument is based on the fallacious proposition that the First Amendment prohibits an injunction against the theft of intellectual property, including trade secrets. That, simply, is not the law. See Dallas Cowboys Cheerleaders, Inc. v. Scoreboard Posters, Inc., 600 F.2d 1184, 1187-88 (5th Cir. 1979) (“The First Amendment is not a license to trammel on legally recognized rights in intellectual property.”); see alsoFederal Election Comm’n v. International Funding Inst., Inc., 969 F.2d DVD CCA’s Respondent’s Brief 13.1110, 1120 (D.C. Cir. 1992) (C.J. Buckley, concurring) (“At some point, the link between speech and an alleged restraint on expression becomes too tenuous to support a constitutional claim. [The defendant] would have us extend the reach of the First Amendment beyond reason when it asks us to sanction what would otherwise be an act of piracy”). In a recent analogous decision concerning the same conduct at issue here, the United States District Court for the Southern District of New York rejected a First Amendment defense and enjoined three defendants from posting DeCSS on their web sites in violation of U.S. copyright law. Universal City Studios. Inc. v. Reimerdes. 82 F. Supp. 2d 211,223 (S,D.N,Y. Feb. 2, 2000) (“it no longer is open to doubt that theFirst Amendment does not shield copyright infringement”). The court explained that enjoining the “posting of DeCSS appears constitutional … because that posting is part of a course of conduct the clear purpose of which is the violation of law[,]” and can be considered “ integral to a course of conduct in violation of a valid … statute.” ld. The court added:

“[I]t has never been deemed an abridgement of freedom of speech or press to make a course of conduct illegal merely because the conduct was in part initiated, evidenced, or carried out by means of language, either spoken, written or printed.” … IT]he chief focus of those promoting the dissemination of DeCSS is to permit widespread copying and dissemination of unauthorized copies of copyrighted works. … [The] defendants cannot latch onto the expressive aspect in order to shield a key aspect of a chain of events, the main purpose of which is unlawful.

Id.at 223 (quoting Giboney v. Empire Storage & Ice Co., 336 U.S. 490(1949)). The trial court’s preliminary injunction order, like countless other court orders enjoining the disclosure of misappropriated trade secrets or the infringement of copyrights, is not an unlawful prior restraint on speech. A. The California Uniform Trade Secrets Act, And Trade Secrets Law In General, Embody Well-Established Legal Principles Designed To Foster Innovation Intellectual property laws, including copyright and trade secret laws, are bedrock principles of our jurisprudence because they foster, not inhibit, creative and economically-valuable expression. See, e.g., Empire Steam Laundry v. Lozier, 165 Cal. 95, 100 (1913) (“That equity will always protect against the unwarranted disclosure of trade secrets and confidential communications and the like is, of course, settled beyondperadventure.”). Without the protection of copyright and trade secret laws, artists have no incentive to create and corporations have no incentive to innovate. See Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 481-82 (1974) (“The maintenance of standards of commercial ethics and the encouragement of invention are the broadly stated policies behind trade secret law.”). Thus, far from stifling speech and free expression, injunctions against the misappropriation of intellectual property actually promote these important virtues by encouraging and protecting creative thought and expression. Cf. Reimerdes. 82 F. Supp. 2d at 222 (explaining that absent injunctions protecting copy protection technologies such as CSS, there would be no way to protect the copyrighted contents of DVDs and this “obviously would discourage artistic progress and undermine thegoals of copyright”). For more than one hundred years, courts have enforced state trade secret laws to protect intellectual property and have enjoined the DVD CCA’s Respondent’s Brief 15.misappropriation of trade secrets. See, e.g., Roberts v. McKee. 29 Ga. 161(1859); Peabody v. Norfolk, 98 Mass. 452 (1868). Indeed, the Supreme Court has held that trade secrets, as defined by state laws, are property protected by the Fifth Amendment takings clause. Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1003-04 (1984). Applying that general principle to the computer age, the Second Circuit has stated:

Trade secret protection … remains a “uniquely valuable” weapon in the defensive arsenal of computer programmers. … Precisely because trade secret doctrine protects the discovery of ideas, processes, and systems which are explicitly precluded from coverage under copyright law, courts and commentators alike consider it a necessary and integral part of the intellectual property protection extended to computer programs. Computer Assocs. Int’l, Inc. v. Altai, Inc., 982 F.2d 693, 717 (2d Cir. 1992)(citations omitted).

B. Courts Have Historically And Routinely Enjoined The Use Or Disclosure Of Misappropriated Trade Secrets And Rejected First Amendment Defenses The appellant ignores the many, many cases in which courts have enjoined the improper misappropriation of trade secrets. See, e.g., Masonite Corp. v. County of Mendocino Air Quality Management Dist., 42 Cal. App. 4th 436 (Cal. Ct. App. 1996) (affirming injunction prohibiting the defendant from disclosing emission records); see also Courtesy Temp. Serv., Inc. v. Camacho, 222 Cal. App. 3d 1278, 1291 (Cal. Ct. App. 1990); American Credit Indemnity Co. v. Sacks, 213 Cal. App. 3d 622, 638 (Cal. Ct. App. 1989); MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir. 1993); Religious Tech. Ctr. v. Netcom On-Line Communication Servs., Inc., No. C-95-20091, 1997 U.S. Dist. LEXIS 23572, at ’31-47 (N.D. Cal. Jan. 3, 1997). Indeed, such injunctions have been issued in California for almost a century. See Empire Steam Laundry v. Lozier, 165 Cal. 95 (1913) (affirming injunction prohibiting the defendant from using plaintiff’s customer lists). It is not surprising that California courts routinely enjoin trade secret misappropriation given that Califomia’s version of the Uniform Trade Secrets Act (the “UTSA”) specifically provides that “actual or threatened misappropriation [of trade secrets] may be enjoined.” Civ. Code � 3426.2(a). In enjoining the misappropriation of trade secrets, courts have routinely rejected First Amendment defenses. See Garth v. Staktek Corp., 876 S.W.2d 545, 549-50 (Yex. App. 1994) (rejecting a prior restraint analysis and affirming lower court’s injunction prohibiting use ofplaintifffs trade secrets); Cheme Indus., Inc. v. Grounds & Assocs., Inc., 278 N.W.2d 81, 94 (Minn. 1979) (rejecting First Amendment defense and affirmingpermanent injunction against former employees restraining their misappropriation of trade secrets); In re Phoenix Dental Svs., Inc., 144 B.R. 22, 24 (Bankr. W.D. Pa. 1992) (First Amendment does not allow a doctor to use his former employer’s trade secret customer lists, even when the former employer is in bankruptcy). Indeed, many courts have recognized that a corporation’s interest in protecting its trade secrets overrides an asserted First Amendment interest. See Standard & Poor’s Corp. Inc. v. Commodity Exch., Inc., 541 F. Supp. 1273 (S.D.N.Y. 1982) (third-party newspaper had no First Amendment right to access a corporation’s trade secrets sealedduring a litigation); Zenith Radio Corp. v, Matsushita Elec. Indus. Co., 529 F. Supp. 866, 912 (E.D. Pa. 1981) (rejecting the argument that the First Amendment requires that the court’s decision not to declassify trade secrets carries a “‘heavy presumption’ of unconstitutionality”); In re the Iowa Freedom of Info. Council, 724 F.2d 658, 664 (Sth Cir. 1983) (denying news media’s petition to overturn the district court’s refusal to release sealed court transcripts containing a private litigant’s trade secrets and rejecting the argument that First Amendment rights can be overridden only by a “compelling governmental interest”); see also Richmond Newspapers, Inc. v. Virginia, 448 U.S. 555, 600 (1980) (J. Stewart, concurring) (while the First Amendment gives the press and public a right of access to civil trials, “[t]he preservation of trade secrets … might justify the exclusion of the public from at least some segments of a civil trial”). Given the multitude of cases, in California and elsewhere, in which courts have enjoined the disclosure of a party’s trade secrets, it is ludicrous to suggest that the trial court abused its discretion or “exceeded the bounds of reason or contravened the uncontroverted evidence,” Continental Baking, 68 Cal. 2d at 527, in issuing the preliminary injunction below. C. The Court’s Injunction Is Not An Unlawful Prior Restraint On Speech The preliminary injunction issued below does not restrict the defendants from discussing or publishing opinions and information about CSS or DeCSS. It does not enjoin the defendants from developing their own encryption or decryption technology. Defendants are free to formulate a DVD decryption program which does not incorporate CSS trade secrets. They are free to study and experiment with cryptography. But they may not “express” their desire or ability to decrypt DVDs by publishing a computer program containing and/or substantially derived from misappropriated proprietary CSS encryption/decryption source code. [FOOTNOTE 5] Bunner asserts that “‘courts have long protected the First Amendment right of one to publish confidential information in a variety of contexts,” (App. Mem. at 9) and cites a string of cases to support his contention that the trial court’s order is a “prior restraint” requiring “strict scrutiny of its elements.” (App. Mere. at 11-14). But, only two of the cases cited in his opening brief even mention trade secrets. In one of those cases, Proctor & Gamble v. Bankers Trust Co., 78 F.3d 219 (6th Cir. 1996), there is no indication that a trade secret was actually at issue. The other case, Ford Motor Co. v. Lane, 67 F. Supp. 2d 745 (E.D. Mich. 1999), was, DVD CCA respectfully submits, wrongly decided. In P&G, the Sixth Circuit reversed a trial court’s order enjoining Business Week’s publication of materials designated by the parties to a litigation to be confidential. 78 F.3d at 221. Significantly, there appears to have been no determination that the materials at issue contained trade secrets. The only mention of trade secrets in the court’s opinion was in its description of the confidentiality stipulation at issue which provided that materials could be designated as confidential “if the parties agreed that it reflected ‘trade secrets or other confidential research, development or commercial information…?” Id.at 222 (emphasis added). Thus, the P&Gcourt did not find “a First Amendment right to publish material that was asserted to be trade secrets….” (App. Mem. at 9). Unlike this case, there was no assertion in P&Gthat the material sought to be enjoined was a tradesecret. The only case cited by appellant in which a court declined to enjoin publication of a trade secret on First Amendment grounds was Ford. It is respectfully submitted that the court’s decision in that case is incorrect and should not be followed. The flaw in the Fordcourt’s reasoning is demonstrated by its misplaced reliance on P&Gwhich, as established above, did not involve a trade secret, and on Near v. Minnesota, 283 U.S. 697 (1930), and New York Times Co. v. United States, 403 U.S. 713 (1971), neither of which dealt with the protection of a private party’s intellectual property. Near involved the publication in a newspaper of anti-semitic articles which were enjoined under a state statute prohibiting “malicious, scandalous and defamatory” publications — a far cry from the publication of stolen trade secrets. 238 U.S. at 702. In that case, the Court held that it was error to enjoin the anti-semitic speech. New York Times– the Pentagon Papers Case — involved an attempt by the Federal government to enjoin The New York Timesand The Washington Postfrom publishing a classified government study on U.S. policy making in Vietnam. 403 U.S. 713. No private interest was implicated. [FOOTNOTE 6]No trade secret or other intellectual property was threatened or even involved. Bunner’s reliance on Wilson v. Superior Court, 13 Cal. 3d 652 (1975), is similarly misplaced, as it did not involve the disclosure of misappropriated intellectual property (the alleged “discussion” that Bunner wants to continue); rather, it concerned an injunction prohibiting a candidate for public office from distributing a “statement on a public issue” — allegedly libelous information concerning his opponent, Id.at 659. Thus, the court was dealing with the “proper accommodation between the law of defamation and the freedoms of speech and press,” Id.at 654, not the publication of a stolen trade secret. As the court in Reimerdesrecognized, the dissemination of DeCSS does not merit the same First Amendment protection as more classic forms of speech which give rise to a prior restraint analysis. The court stated:

Courts often have upheld restrictions on expression that many would describe as priorrestraints. … [W]e deal here with … computer code, a fundamentally utilitarian construct even assuming it embodies some expressive element. Hence, it would be a mistake simply to permit its assumed expressive element to drive a characterization of the code as speech no different from the Pentagon Papers, the publication of a newspaper, or the exhibition of a motion picture and then to apply prior restraint rhetoric without a more nuanced consideration of the competing concerns.

Reimerdes, 82 F. Supp. 2d at 224-25. If a court were required to engage in a prior restraint analysis every time a plaintiff sought to enjoin the disclosure of misappropriated trade secrets, the UTSA would be rendered worthless. See, e.g., Garth, 876 S.W.2d at 550 (rejecting a prior restraint analysis because “injunctions against trade secret violations may be necessary to provide meaningful legal protection to the owners of intellectual property”). Perhaps recognizing the untenable nature of his assertions, on appeal Bunner contends (for the first time) that the California UTSA may itself be unconstitutional: “[t]o the extent the Act authorizes an injunction against one who owed no fiduciary or other duty of confidentiality to the holder of the trade secret, the Act is unconstitutional.” (App. Mere. at 26). This argument is without merit as it is well established that even parties not in privity with a trade secret owner may be held liable for misappropriation of trade secrets if they acquire the trade secret from someone who obtained it improperly and they knew or should have known that the trade secret was improperly acquired. See UTSA � 3426.1(b)(1)-(2)(B); Restatement of Torts � 757(c). In fact, defendants conceded in their papers submitted below that under the California UTSA “‘[m]isappropriation’ of a trade secret means: ‘[d]isclosure by a person who … used improper means to acquire knowledge of the trade secret; or … at the time of disclosure … knew or had reason to know that his or her knowledge of the trade secret was … derived from … a person who had used improper means to acquire it….’”(AA 182 (citing Civ. Code, � 3426.1(b)(2)) (emphasis added)). See also PMC, Inc. v. Kadisha, 78 Cal. App. 4th 1368, 1383 (Cal. Ct. App. 2000) (holding that the directors, officers and shareholders of a corporation, who were not bound by a duty of confidentiality, could be held liable for misappropriation where they knowingly obtained the plaintiff’s trade secrets from a former employee who did breach a duty); Computer Assocs. Int’l, 982 F.2d at 718-19 (2d Cir. 1992) (holding that the defendant corporation, which was not bound by a duty of confidentiality, could be held liable for misappropriation where it knowingly obtained the plaintiff’s trade secrets from a former employee who did breach a duty); C&F Packing Co., Inc. v. IBP, Inc., No. 93-C1601, 1998 WL 1147139, at *5-8 (N.D. Ill. Mar. 16, 1998) (the defendant, a supplier who was given the plaintiff’s sausage-processing trade secret by Pizza Hut, could be held liable formisappropriation if it knew that Pizza Hut breached its duty of confidentiality to the plaintiff); Data Gen. Corp. v. Grumman Svs. Support Corp., 825 F. Supp. 340, 360-61 (D. Mass. 1993) (affirming jury verdict that defendant was liable for misappropriation of plaintiffs software trade secret, where the plaintiff “never proved” how the defendant acquired the trade secret but the defendant knew that the plaintiff protected the tradesecret with confidentiality agreements). Numerous courts have, as Bunner admits, enjoined persons unfettered by a duty or agreement of confidentiality from disclosing and publishing trade secrets. (App. Mere. at 26). See cases cited supra; see also Boehner v. McDermott, 191 F.3d 463, 476 (D.C. Cir. 1999) (“[o]ne can find no firm First Amendment right to disclose information simplybecause the information was, in the first instance, legally acquired by the person who revealed it[;] … [t]here appears to be no constitutional difficulty with laws prohibiting the disclosure of lawfully obtained trade secrets”). The cases cited above (although ignored by Bunner) highlight Bunner’s incredible understatement when he observes: “There is perhaps some degree of hyperbole surrounding the prohibition against prior restraints. And the DVD CCA may well uncover various court sanctioned examples of injunctions against publication by persons not voluntarily bound by a confidentiality agreement or fiduciary duty.” (App. Mere. at 26 (emphasis added)). It is not difficult to “uncover” such examples. Courts routinely issue such injunctions and the lower court was well within its discretion in determining that this was not a case involving a “prior restraint,” but rather, one involving the misappropriation of trade secrets and that the issuance of a narrowly tailored preliminary injunction to prevent further irreparable harm was appropriate. II. THE LOWER COURT ACTED WELL WITHIN ITS DISCRETION IN ENTERING A PRELIMINARY INJUNCTION BARRING DEFENDANTS FROM MISAPPROPRIATING CSS TRADE SECRETS The California UTSA provides that “[a]ctual or threatened misappropriation may be enjoined.” Civ. Code � 3426.2(a). In deciding whether or not to issue a preliminary injunction enjoining an alleged misappropriation of trade secrets, the trial court must evaluate two factors: (1) the likelihood that the plaintiff will prevail on the merits at trial; and (2) the interim harm that the plaintiff is likely to sustain if the injunction were denied as compared to the harm that the defendant is likely to suffer if the preliminary injunction were issued. Cohen v. Board of Supervisors, 40 Cal. 3d 277, 286 (1985). In addition, “[a] preliminary injunction may be properly issued whenever the questions of law or fact are grave and difficult, and injury to the moving party will be immediate, certain, and great if it is denied, while the loss to the opposing party will be trivial if it is granted.” Wilms v. Hand, 101 Cal. App. 2d 811, 815-16 (Cal. Ct. App. 1951). A. The Lower Court Properly Found DVD CCA Was Likely To Prevail On The Merits Of Its Trade Secret Misappropriation Claim Defendants never disputed below that a trade secret consists of (a) information, (b) which derives value by not being generally known to the public or to those who can obtain economic value from its disclosure or use, and (c) “‘which is subject to efforts that are reasonable under the circumstances to maintain its secrecy.’” (AA 182 (quoting Civ. Code, � 3426.1(d)) (emphasis added)). Additionally, defendants conceded below that under the California UTSA, “‘[m]isappropriation’ of a trade secret means: ‘[d]isclosure by a person who … used improper means to acquire knowledge of the trade secret; or … at the time of disclosure … knew or had reason to know that his or her knowledge of the trade secret was … derived from … a person who had used improper means to acquire it….’” (AA 182 (citing Civ. Code, � 3426.1 (b)(2)) (emphasis added)). 1. The decision of the lower court that CSS was entitled to trade secret protection was correct The lower court determined that CSS technology is entitled to trade secret protection because it has independent economic value in that it is not generally known and that DVD CCA and its predecessors have taken “reasonable” steps to maintain its secrecy. (AA 713). This decision is supported by the evidence submitted by the defendants. For example, defendants’ declarant David Wagner conceded that DVDs contain a security architecture: “One important component of the DVD security architecture is the use of encryption to prevent unauthorized parties from copying or watching DVD movies or other encrypted content. The encryption algorithm used for these purposes is known as CSS….” (AA 263, 24; AA 180). [FOOTNOTE 7] Notwithstanding Bunner’s effort to confuse the record by describing DeCSS (for the first time) as a different “idea” than “CSS” (App. Mem. at 2) [FOOTNOTE 8]defendants’ submissions below confirm that CSS trade secrets are contained in DeCSS and that such program was substantially derived from misappropriated CSS trade secrets. [FOOTNOTE 9]Bunner’s declarant Frank A. Stevenson confirmed that the original posting of DeCSS occurred on October 25, 1999. (AA 226, 14). Additionally, tests on this original posting confirmed that CSS licensee Xing’s software was the vehicle through which hackers stole CSS trade secrets and created DeCSS. (AA 479-81, 2-5). Moreover, numerous news accounts and extensive discussions among computer hackers on the Slashdot.org web site � the hacker discussion group on which Bunner admits he learned about DeCSS just one day after its original posting (AA 287, 3-4) — demonstrate that DeCSS was created by hacking into Xing’s software and misappropriating CSS technology. (See supra at pp. 8-9). The court below explained that DeCSS is “a program which allegedly embodies, uses and/or is a substantial derivation of CSS.” (AA 712). There is no record evidence to contradict this definition/understanding of DeCSS. Accordingly, the lower court wasabsolutely correct and, in any event, clearly within its discretion in finding that CSS proprietary information is entitled to trade secret protection and that such proprietary information would be disclosed by, among other things, posting the DeCSS program. 2. The overwhelming weight of the evidence below establishes that defendants, including Bunner, have misappropriated CSS trade secret information and knew or had reason to know that the trade secrets were obtained improperly As discussed, the evidence below — including that which was submitted by defendants — establishes that DeCSS was created by virtue of hacking through CSS Licensee Xing’s software and obtaining Xing’s “master key.” Moreover, the evidence below makes clear that access to the Xing software and, thus, to the CSS technology could only be obtained by violating Xing’s software licensing agreement which prohibits reverse engineering. (AA 340-43). As the lower court explained, the acquisition of trade secrets by reverse engineering would satisfy the “‘improper means’” element of the California UTSA “if whoever did the reverse engineering was subject to [Xing's software] licence agreement which preconditioned installation of DVD software or hardware, and prohibited reverse engineering.” (AA 713). [FOOTNOTE 10] Further, defendants’ papers below establish that they (including Bunner) and the entire hacker community knew, or had reason to know, that the CSS trade secrets were obtained improperly and that it was obtained by hacking the Xing software in violation of a software license agreement. For example, defendant Bunner submitted a declaration, Declaration of Andrew Bunner In Opposition to Order to Show Cause, in which, while he does not state where he obtained the trade secrets that he disseminated on his site, he does state that he “became aware of” the CSS trade secrets on “Slashdot.org” and read and participated in the discussions about CSS trade secrets on this site. (AA 287, 4). One need only look at the numerous comments about Xing in various Slashdot.org discussion groups, including those around the same time that Mr. Bunner “became aware of” CSS, to conclude that he knew or should have known that Xing’s DVD software was improperly hacked in order to create the DeCSS program. (See supra at pp. 8-9; AA 354-65, 48-96). [FOOTNOTE 11]Besides the discussions on Slashdot.org and other accounts of the “hack” of CSS, 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. (See supra at pp. 9-10). Based on this uncontroverted record evidence, the lower court was well within its discretion when it found that DVD CCA will likely be able to demonstrate that the defendants knew or should have known that CSS was obtained by improper means — that is, through a hack of the technology protecting CSS, undertaken in violation of a software licensing agreement and, thus, that DVD CCA was likely to prevail on the merits of its trade secret misappropriation claim. (AA 713-14). The court’s determination was certainly not one which “exceeded the bounds of reason or contravened the uncontradicted evidence.” Continental Baking, 68 Cal. 2d at 527. B. The Lower Court Properly Balanced The Harm That DVD CCA Would Suffer If The Injunction Were Denied As Compared To The Harm The Defendants Would Suffer If Issued The court below was well within its discretion when it found that the balance of harm was decidedly in DVD CCA’s favor. The uncontroverted record evidence established that 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. (AA 62-63, 1 5-6; RA 3, 1 6; RA 10, 1 31; AA 15-16, 151). 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. (RA 3, 1 7; RA 10, 131; AA 62-63, 15; AA 15-16, 151). Accordingly, the record evidence established that if the defendants were permitted to continue to misappropriate CSS trade secrets, the DVD industry would be irreparably harmed, and DVD CCA’s very existence threatened, because its sole business purpose is to be the tri-industry (motion pictures, computers and consumer electronics) licensing entity and administrator of the CSS technology. (RA 11, 1 32). [FOOTNOTE 12] In addition, the harmful effect of defendants’ unlawful activities both on the motion picture industry, centered in California, and the companies which provide the software and hardware to allow consumers to access the digital images, many of which are also located in California, would be immeasurable absent an injunction. Apart from the substantial resources that the motion picture industry has invested in the adoption of the DVD format, the ability of defendants and others to make and distribute wholesale copies of copyrighted motion pictures [FOOTNOTE 13]would destroy the industry’s ability to protect its most valuable asset � its copyrights in its motion pictures. (AA 64-65, 10-12; RA 11, 33). [FOOTNOTE 14] While there was extensive unrebutted record evidence on one side of the balance demonstrating the significant irreparable harm that would be suffered by DVD CCA in the absence of injunctive relief, the defendants did not come forward with any showing of harm that would result if they were barred from continuing to misappropriate CSS trade secrets save for their erroneous assertions that the injunction sought would not allow them to discuss, debate, criticize, and research DVD encryption issues. But as discussed above, the lower court made very clear that defendants have always been (and still are) free to engage in such “expression,” which has never been at issue in this case. Given the huge imbalance with regard to the harm that would be suffered by the parties, it cannot be said that the lower court abused its discretion. It certainly cannot be said that the lower court “exceeded the bounds of reason or contravened the uncontradicted evidence,” Continental Baking, 68 Cal. 2d at 527, in finding that the balance of harm favored granting injunctive relief. [FOOTNOTE 15] CONCLUSION For the reasons stated above, the lower court acted well within its discretion when granting the preliminary injunctive relief set forth in the January 21, 2000 Order. Accordingly, the issuance of such injunction must be affirmed by this Court. Dated: June 13, 2000 New York, New York Respectfully submitted, WEIL GOTSHAL & MANGES LLP OF COUNSEL: JARED B. BOBROW (Bar No. 133712) EDWARD J. BURKE(Bar No. 103414) WEIL, GOTSHAL & MANGES LLP JEFFREY L. KESSLER* ROBERT G. SUGARMAN* JONATHAN S. SHAPIRO* By: Attorneys for Plaintiff DVD COPY CONTROL ASSOCIATION, INC. *Admission papers being submitted to the Court. ::::FOOTNOTES:::: FN1Citations to the record are indicated herein as “RA” for Respondent’sAppendix and “AA” for Appellant’s Appendix. FN2Bunner’s strange suggestion that “the DVD CCA might actually owe its existence to DeCSS, or at least to this lawsuit” (Opening Brief of Appellant Andrew Bunner, hereinafter App. Mem.’ at 22 n.14), obviously ignores record evidence concerning the DVD CCA’s formation in December of 1998 and its subsequent transition to become the sole licensing entity for CSS technology. FN3The major motion picture companies (holders of the underlying copyrights in the motion pictures contained on DVDs) have commenced two copyright infringement actions in federal court in New York and Connecticut against local web site operators for violation of the Digital Millennium Copyright Act in connection with the trafficking of DeCSS. See Universal City Studios, Inc. et al., v. Reimerdes et al., No. 00 Civ. 0277 (LAK) (S.D.N.Y., filed Jan. 14, 2000); Universal City Studios, Inc. et al. v. Hughes, No. 00 CV 72 (RNC) (D.C. Conn., filed Jan. 14, 2000). DVD CCA is not a party to those actions. FN4The court refused to grant preliminary injunctive relief against one who only “links” to another web site which posts CSS trade secrets: However, the Court refuses to issue an injunction against linking to other websiteswhich contain the protected materials as such an order is overbroad and extremely burdensome. Links to other websites are the mainstay of the Internet and indispensable to its convenient access to the vast world of information. A website owner simply cannot be held responsible for all of the content of the sites to which it provides links. Further, an order prohibiting linking to websites with prohibited information is not necessary since the Court has enjoined the posting of the information in the first instance.(AA 716). FN5Bunner takes great pains to show that source code is speech. Plaintiff agrees, but the point is irrelevant. A musical score is also speech, but no one would suggest that an injunction prohibiting infringement of the score would be an unlawful prior restraint. The formula for Coca-Cola� is undoubtedly made up of speech, but its improper misappropriation and disclosure could certainly be enjoined. The Church of Scientology”instructions” at issue in Religious Tecb. Ctr., 1997 U.S. Dist. LEXIS 23572, are “speech,” but that did not prevent the district court from issuing an injunction prohibiting the defendants, in that case from publishing those trade secrets on the Internet. Id.at 41 (“If publicatlon is not prohibited pending trial, RTC may lose any secrets it has. On the other hand, the injunction will not preclude defendant from engaging in criticism of the Church pending trial. …”). FN6The Eighth Circuit in Iowa Freedom of Information Council, recognized this distinction: “We stress that this case involves private commercial conduct. If the [trade secrets at issue] had some substantial relation to an important governmental or political question, an entirely different question would be presented and we might be required to embark on the [First Amendment] weighing process urged on us by petitioners. In the present case, though, there seems to be no such necessity.” 724 F.2d at 664. FN7 See alsoAA 177 (“In order to limit the possibility of unauthorized copying of the data on the DVD, the consortium of content producers represented by plaintiff has elected to ‘encrypt’ the video and audio data each disk contains. Each member of the consortium of producers is assigned a unique ‘key,’ which is then used by an ‘encrypting’ process to transform the actual video and audio data into a form that cannot be played by someone who does not know how to ‘decrypt’ the data.”). FN8This argument, although without merit, is inappropriately raised by Bunner on appeal for the first time — particularly given that this new theory contradicts record evidence. See, e.g., Brown v. Boren, 74 Cal. App. 4th 1303, 1316 (Cal. Ct. App. 1999) (“It is a firmly entrenched principle of appellate practice that litigants must adhere to the theory on which a case was tried. Stated otherwise, a litigant may not change his or her position on appeal and assert a new theory. To permit this change in strategy would be unfair to the trial court and the opposing litigant.”). FN9It is well established that a “[d]efendant need not appropriate every feature of plaintiff’s trade secret to be a wrongful user; substantial appropriation is actionable.” 4 Milgrim on Trade Secrets � 15.01 [1 ][d][vi] (2000). “A party may not use another’s trade secret even with independent improvements or modifications so long as the product or process is substantially derived from the trade secret. If the law were not flexible enough to reach such modifications, trade secret protection would be quite hollow.” Speech Tech. Assocs. v. Adaptive Communication Svs., Inc., No. C-88-2382-VRW, 1994 WL 449032, at *10 (N.D. Cal. Aug. 16, 1994) (citations omitted) (applying the California UTSA and finding defendant liable for misappropriation where it developed and sold a speech technology device that was substantially derived from a prototype device belonging to the plaintiff). FN10 Cf. CMAX/Cleveland, Inc. v. UCR, Inc., 804 F. Supp. 337 (M.D. Ga. 1992) (defendants misappropriated plaintiff’s computer software when it copied parts of the software to make its own version and gave unauthorized third parties access to the software in violation of the software license agreement); Alcatel USA, Inc. v. DGI Techs., 166 F.3d 772, 784-85 (5th Cir. 1999) (reverse engineering improper misappropriation where defendant also caused plaintiff’s licensee to breach confidentiality agreement); ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1455 (7th Cir. 1996) (enforcing terms of software license agreement to prohibit a consumer from selling over the Internet information derived from the plaintiff’s uncopyrighted telephone directory database); SAS Inst., Inc. v. S & H Computer Sys., Inc., 605 F. Supp. 816, 821, 827-28 (M.D. Tenn. 1985) (defendants violated implied covenant of good faith where they used plaintiff’s source code to create a new program after they signed a license agreement prohibiting copying of the code except for back-up purposes); Technicon Data Svs. Corp. v. Curtis 1000 Inc., 1984 De. Ch. LEXIS 588, at *22-23 (Del. Chahc. 1984) (reverse engineering improper where defendant knew the product was the subject of a confidentiality agreement and lied to get access to it); see also Telerate Svs., Inc. v. Caro, 689 F. Supp. 221, 231-33 (S.D.N.Y. l988 granting trade secret injunction where defendant accessed plaintiff’s database by using an unauthorized “datascope” connection to terminals that were licensed to plaintiff’s subscribers, and then made the database available to the subscribers on non-licensed computers; the court explained: “the term ‘reverse engineering’ is not a talisman that may immunize the theft of trade secrets. The relevant inquiry remains whether the means used to obtain the alleged trade secret, including reverse engineering, were proper”). FN11Bunner asserts that the court below erred by “imput[ing]” knowledge of impropriety to him based on the comments of others in the hacker community. ( SeeApp. Mem. at 30-31). The lower court, however, never “imputed” knowledge to Bunner, but simply made a determination, which was well within its discretion, that DVD CCA was likely to be able to prove that Bunner and the other defendants “knew or should have known” about the impropriety of their actions. Such determination was made after review of the extensive record evidence of statements on various web sites, including on Slashdot. As discussed, it was Bunner himself who said he learned of DeCSS during his participation in Slashdot discussions and has never said anything else concerning his source for DeCSS or his knowledge of impropriety (or lack thereof) subsequent to his alleged ignorance of impropriety “at the time” of his original posting. (AA 287-88, 3-5, 12- 13). Of course, “‘[s]tudious ignorance’ will not insulate a defendant from liability” and “the defendant’s knowledge ‘often must be proved by the weight of credible circumstantial evidence.’” Data Gen., 825 F. Supp. at 360 (citations omitted). FN12The court in Reimerdes, like the court below here, determined that the DVD industry would be harmed significantly in the absence of an injunction barring the dissemination of DeCSS:The security of DVD technology is central to the continued distribution of motion pictures in this format. The dissemination and use of circumvention technologies such as DeCSS would permit anyone to make flawless copies of DVDs at little expense. Without effective limits on these technologies, copyright protection in the contents of DVDs would become meaningless and the continued marketing of DVDs impractical.82 F. Supp. 2d at 222 (footnote omitted). FN13Bunner’s argument that DVD CCA does not allege that he “is pirating movies” or “‘is copying or distributing moves” (App. Mem. at 4) is misplaced. As the California UTSA makes clear, disclosure of CSS trade secrets is the root of the harm here, not whether Bunner himself utilizes the trade secrets in, order to pirate DVDs. No one would suggest that disclosing the Coca-Cola secret formula was lawful as long as the one who discloses the trade secret does not use the formula to mix up a batch of Coke. FN14Additionally, 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. (RA 11-12, 34; AA 16, 54; AA 64-65, 12). 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 encryption technology to protect the DVD audio system. The launch of DVD audio products, planned for December 1999, was, thus, postponed for at least six months while new copy protection technology is developed, agreed upon, and implemented. (RA 11-12, 34; AA 17, 54). Amazingly, Bunner opines that defendants’ “exposure of the weakness of CSS” may actually have “helped” DVD CCA. (App. Mem. at 23). This is similar to defendants’ claims below that their intellectual property theft might have provided some type of “public service”: “public disclosure that CSS is insecure alerts the Motion Picture Industry’s antipiracv forces that DVDs are vulnerable to piracy.” (AA 187 (emphasis added.)) Of course, as pointed out below, defendants never communicated with DVD CCA or any motion picture studio to advise them that the technology was “weak.” (AA 485-86, 17). Instead, defendants “alerted” the industry and “expos[ed] … the weakness of CSS” by disseminating the trade secrets as widely as they could, and encouraged others to do so, in a highly publicized attempt to destroy trade secret protection and facilitate the infringement of motion picture copyrights. See, e.g., RA 171 (flyer handed out by defendants outside of TRO hearing below, which attached misappropriated CSS trade secrets and proudly proclaimed: “Get Your Free DVD Decryption Here: Courtesy of the myopia of the DVD Industry and the bullying tactics of their lawyers” (emphasis in original)); see also Reimerdes, 82 F. Supp. 2d at 214 (“Members of the hacker community … stepped up efforts to distribute DeCSS to the widest possible audience in an apparent attempt to preclude effective judicial relief. One individual even announced a contest with prizes (copies of DVDs) for the greatest number of copies of DeCSS distributed, for the most elegant distribution method, and for the ‘lowest tech’ method.”). FN15On appeal Bunner attempts to manufacture lower court error by alleging that the court below “place[d] … the burden of proof on Bunner by “requir[ing] Bunner to prove that he has suffered harm.” (App. Mem at 15). The Court did not shift the burden of proof to Bunner, but simply found that when weighing the relative harm of the parties, Bunner did not come forward with any relevant evidence among the voluminous filings that would demonstrate harm. (AA 714-15). Similarly, Bunner alleges that the lower court erred by shifting the burden to him to demonstrate that defendants activities were lawful under Norwegian law. (App. Mem. at 15). Of course, it was Bunner who – in defense of his unlawful posting and continued misappropriation of CSS trade secrets — first asserted (via a declaration from a computer hacker) that “reverse engineering” even if it was in violation of a license agreement was “legal in Norway.” (AA 634). In response, DVD CCA submitted the Declaration of a Norwegian lawyer with 12 years of experience in intellectual property law and who had analyzed the particular facts of this case. (AA 305). Once again, the lower court did not require Bunner to prove this issue, but rather analyzed the relevant record evidence and concluded that, at this point, it was “not well positioned to interpret Norwegian law.” (AA 714). Subsequent to the proceedings below, in a highly publicized raid, Norwegian authorities arrested Mr. Johansen and seized his computer and other evidence from his residence in connection with a criminal investigation concerning Johansen’s role in the CSS “hack.” See Reimerdes, 82 F. Supp. 2d at 214 n.2. Of more significance, however, DVD CCA is not required to prove that the original hack of the CSS software was “illegal” to establish it was “improper” for purposes of establishing its trade secret misappropriation claim. See E.I. duPont deNemours & Co. v. Christopher, 431 F.2d 1012, 1017 (5th Cir. 1970) (otherwise lawful aerial photography of plant construction was an improper means when done to gain access to trade secret), cert. denied, 400 U.S. 967 (1971); accord Pioneer Hi-Breed Int’l v. Holden Foundation Seeds, Inc., 35 F.3d 1226 (8th Cir. 1994).

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