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29 January 2000.


[89 pages.]

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

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UNIVERSAL CITY STUDIOS, INC.;
PARAMOUNT PICTURES CORPORATION;
METRO-GOLDWYN-MAYER STUDIOS, INC.;
TRISTAR PICTURES, INC.; COLUMBIA
PICTURES INDUSTRIES, INC.; TIME
WARNER ENTERTAINMENT CO., L.P.;
DISNEY ENTERPRISES, INC.; and
TWENTIETH CENTURY FOX FILM
CORPORATION,

Plaintiffs,

v.

SHAWN C. REIMERDES; ERIC CORLEY
a/k/a "EMMANUEL GOLDSTEIN"; and ROMAN KAZAN,

Defendants.

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00 Civ. 0277 (LAK)

January 21, 2000 2:45 p.m.

Before:

HON. LEWIS A. KAPLAN,
District Judge

APPEARANCES

PROSKAUER ROSE LLP

Attorneys for Plaintiffs

BY:

LEON P. GOLD
JON BAUMGARTEN
WILLIAM M. HART
KENNETH RUBENSTEIN

PETER L. KATZ

Attorney for Defendants
and-
HUBER & SAMUELSON, P.C.
BY: ALLONN E. LEVY (via speakerphone)
ROBIN D. GROSS (via speakerphone)

(In chambers)

THE COURT: All right. So one of the people on the phone is Robin Gross and the other gentleman is—

MR. KATZ: Allonn Levy.

Judge, if I may, in the interim, these are two applications pro hac vice for Ms. Gross and Mr. Levy. Judge, I’ve lost them. I’ll get Ms. Gross and tell her we’re ready to proceed.

THE COURT: Once more. Ms. Gross? Ms. Gross?

MS. GROSS: Hello?

THE COURT: Ms. Gross, are you there?

MS. GROSS: Yes, I’m here.

THE COURT: Mr. Levy, are you there?

MR. LEVY: Allonn Levy here. Thank you.

THE COURT: Everyone is present. Let me first indicate that this is being held in chambers rather than in the courtroom to accommodate Ms. Gross and Mr. Levy, who are in California and, for various reasons, were unable to get to New York for the hearing this afternoon. And I have usable conference facilities here, but not in the courtroom. The proceeding is nonetheless public. There are various members of the public and I believe the press in attendance, and they are certainly welcome.

Mr. Katz has given me pro hac vice applications on behalf of Ms. Gross and Mr. Levy. I will hear Ms. Gross or Mr. Levy this afternoon. These applications are not in the right form and they’re not accompanied by the necessary check that the clerk’s office will insist on, so you should make those applications and pay the fees in due course. But I’ll hear you this afternoon.

MR. LEVY: Thank you, your Honor, and I apologize for the errors.

THE COURT: No problem. All right. It’s the plaintiff’s motion for a preliminary injunction. I’ll hear you, Mr. Gold, on behalf of the plaintiff.

MR. KATZ: Judge, if I may just have one housekeeping matter before we begin. Your Honor had directed that reply documents be served via fax by 12:30 today. It’s my understanding that counsel in California had not received it when I had left my office.

Counsel, have you since received the documents.

MS. GROSS: I have not received the documents.

MR. LEVY: I have not, your Honor. However, I have not been back at my office. I understand from Mr. Katz that there were some 94 pages faxed, so I don’t imagine that I would have been able to review them in any case. But, no, I did not have them.

THE COURT: Mr. Katz, did you receive them?

MR. KATZ: Judge, I received 71 of the 94 pages. I had to leave my office to get down to court on time. I simply, even though they were faxed prior to, I believe the fax started coming through about 11:30, it took well over an hour for the transmission to complete and, as a result, Judge, because I was travelling in a car, I did not have an opportunity to review these documents, 94 pages. I simply wasn’t able to do so in the period of time in which they were sent.

THE COURT: Duly noted.

MR. GOLD: Yes.

THE COURT: Mr. Gold.

MR. GOLD: Thank you, your Honor. This case, your Honor, is all about digital videodiscs, DVDs, which is the latest technology for watching copyrighted motion pictures at home. Competing with and catching up on the videotape that so many of us are used to, the DVD gives us much clearer, sharper pictures than the videotapes. However, the DVDs can be copied if unprotected. And unlike videotapes, where if you run off one copy, you get a substantial decrease in the quality and two, much more so, and it gets worse and worse so you don’t really have a copying problem, with a DVD, you can copy an endless number of them and they’re just about as clear as the original DVD.

THE COURT: Is the content of a DVD simply a data file?

MR. GOLD: Yes, your Honor.

THE COURT: Okay.

MR. GOLD: Now, before plaintiffs were willing to make DVDs available, they decided that they had to have an encryption technology so that the content and their copyright interest in the content could be protected, something that would scramble the picture and scramble the sound. And that system was created, and it is called CSS, which stands for content scrambling system. And you can’t watch a movie unless you have an authorized DVD player, and the authorized DVD player has the computer key to the program. So with a DVD and an authorized player, the authorized player will unscramble the picture and the sound and you can watch your movie. But you can’t copy it. The CSS technology prevents that.

THE COURT: And the key is what? Is it software? Is it hardware? Is it a combination?

MR. GOLD: The key is software.

THE COURT: Okay.

MR. GOLD: So what CSS is is a safety device which protects the copyrighted material. Now, the motion picture studios, in creating DVDs and getting them out to the public and increasing the number, relies not only on the encryption system, not only on CSS because given the developments in the world over the last ten years and even over the last two or three years, it was known to them that there was a possibility that there would be decryption of CSS and there was a lot of pressure by many copyright owners to get extra protection from Congress, and a statute called a Digital Millenium Copying Act was passed. And what it created was a new right that a copyright owner would have if he had to protect the system, a technology which would protect his copyrighted material. He got the right to that safety device and the right not to have it circumvented as a matter of federal law. So this is like a guard or a moat surrounding the house, the protected material.

THE COURT: Filled with litigators instead of alligators.

MR. GOLD: And increasingly so. Yes, your Honor, that’s true. And I appreciate the differential between those two. And the act was passed to bring the U.S. in line with the world intellectual property organization which had created a treatise of which there are perhaps 12, 14 countries that have signed it, and this treatise provides legal protection and legal remedies against circumventing technology systems that protect copyrighted devices.

So what the motion picture studios are relying on in terms of selling DVDs is their copyright in the motion picture, a licensing system that they have created to allow people to use the copyright, and the anticircumvention law, and what they believe is their right to court enforcement of the anticircumvention law in a rapid and effective way, through preliminary injunctions and then final injunctions. That is the safety net, they believe, surrounding their copyrighted material.

Now, in late ‘98, I believe, a technological device, a computer device, was created called DCSS, DeCSS, and I guess it stands for decrypted CSS.

THE COURT: Was it ‘98 or ‘99?

MR. GOLD: ‘99, did I say 98?

MR. HART: Yes.

MR. GOLD: Now, what that device does, if you have it, is you have it in your computer, it will unscramble the system, unscramble the movie, unscramble the movie.

THE COURT: Is it a device or is it a program?

MR. GOLD: It’s a computer program. I think that’s a technological device computer program, which protects, which does away with CSS. And once it does away with it, it does away with it, you can watch it on your computer, you can watch the movie, copy it, download it, and run off lots of copies. Once CSS decrypts, it decrypts.

Now, what we did, as soon as this started to be used was to send out letters telling everybody they had no right to use it, that they were violating the law and we would seek enforcement of the law, and that did an awful lot of good because an awful lot of websites that were posting DeCSS stopped doing it.

Then there was a lawsuit that was started in California under a trade secret law. The motion picture companies are not parties and don’t control in any way that litigation. There was a hearing in court, as I say, in state court, under the trade secret law, to try to enjoin the use of DeCSS. There was a hearing on preliminary injunction; it was not issued and a lengthy hearing was conducted on the preliminary injunction this Tuesday. There has been no decision on the preliminary injunction. However, it is not brought under the Digital Millenium Copying Act; it’s brought under state copying, it’s brought under state secrecy laws, trade secret laws, and we are not parties to that action.

I think what I would like to do, your Honor, since a major defense in the reply papers has been that defendants aren’t appropriate parties, I would like to get into who the defendants are and why they have been named and what are they doing. And if I can refer you to the declaration of Mr. Boyden, Bruce Boyden, a lawyer in my office, an associate in my office, in support of the application for preliminary injunction, I will be able to show you just what’s happening.

THE COURT: I’ve read your papers. Each of the defendants is listed on some registration or other, the domain name registrations, I suppose, as at least the technical contact, if not other positions, with the registrant of each of three websites that have posted DeCSS. Am I right?

MR. GOLD: Yes. Each one of them is posting DeCSS and one of them is also linking DeCSS. Now, by that, I mean one of them is posting the names of other websites and, if you click on to the other website, you are delivered to a page of another website on which DeCSS appears, and then, if you double click DeCSS, you get it right into your computer, just as though it was originally done.

So one of them is linking as well as posting, but all three of them are posting; except for at the present time we’ve been advised that one of the defendants, Mr. Kazan, called us and he said that, if we got a court injunction, he would take it down, just send him the injunction. But when we checked in the next several days, he had taken DeCSS off of his website.

THE COURT: All right.

MR. GOLD: And as your Honor has seen, when you went to our papers, when you go to one of these websites, you just have a section which has DeCSS underlined and you simply put your mouse on that, double click it, and you have DeCSS. You can then watch a DVD without an authorized player and copy it if you want.

Now, under the statute, three conditions need to be satisfied: Are defendants offering, providing, trafficking in this device, and is it designed to circumvent the technological measure that’s controlling access to protected copyright work? We think it’s all very, very clear.

Circumvent means to descramble, and that’s what DeCSS does. A technological measure effectively controls the access here to do the protected work and CSS is such a measure and it’s designed to control access to our copyrighted works. Because CSS is an encryption technology, you’ve got to have a software key to open it, so CSS qualifies as an access control measure. And all of the statutory requirements are met, and defendants are clearly violating them.

The statute does say something about primary purpose, and I’d like to get into that for just a moment. Under 1201(a)(2), the statute says that no person shall manufacture, offer, provide, or otherwise traffic in any technology, in any technological device that is primarily designed for the purpose of circumventing a technological measure. That effectively controls the access to a work protected under the title.

Now, if you look at the statute, if the technological measure did not control access to a copyrighted work, then the statute doesn’t apply. For instance, you could have some device that controls access to work that is in the public domain. It’s not protected by copyright and the statute wouldn’t be applicable. Here, the issue is whether the primary purpose of DeCSS is to get around the safety measure in order to get to a protected, copyrighted work, and the reason that it’s so clear it was primarily designed to do that is that it has absolutely no other function. There’s nothing that you can do with DeCSS except decrypt CSS. That’s all it does.

So I think the question of the primary purpose is quickly and easily answered by that analysis. Now, there are several exceptions that the defendants have talked about and, naturally, all of the major exemptions are the statute so they’re thrown in here and they claim each one of them means that they haven’t violated the statute. One of them is a reverse engineering exception. The legislative history that we’ve cited in our brief makes clear that the reverse engineering exception only applies to a technological device to a program that prevents access to a computer program and nothing else.

Congress decided that would promote competition in the computer world, and they did not want to protect computer programs that were guarded in that way by a protective device. But as the legislative history is very clear, reverse engineering does not at all in any way protect or provide an exemption for someone who is getting around a safety device for the purpose of getting at a copyrighted act, at a copyrighted piece of work, a picture or a book or anything like that. The only thing that would be exempted would be the computer program. Now, aside from that, there’s nothing in any of the papers before you that would indicate that these particular defendants have those kind of skills.

All of the evidence would indicate that they’re using DeCSS and telling other people to use DeCSS to watch movies that they otherwise would have to watch on licensed players. And they can also download movies, they can trade them with their friends. There’s nothing in the record to suggest that these people are involved in or could possibly be involved in reverse engineering. But even if there were, they can’t use that exemption here because the exemption only applies to a safety device around a computer program and not around any other kind of copyrighted work.

Next, they talk about an exemption because they are doing research and the research has something to do with coming up with an alternate player, a Linux system, a Linux player. Again, one would have to note that there is nothing that indicates that these particular defendants that are before you and charged with violating the statute would be able to do that research.

THE COURT: Is there not a more basic answer to that argument?

MR. GOLD: Yes, there is. And that is that you have to go to the copyright owner and ask his permission and negotiate with him before this exemption applies, and they haven’t done it and they don’t claim to have done it.

THE COURT: But even more basically, you’re suing under 1201(a)(2), right?

MR. GOLD: Yes.

THE COURT: And doesn’t the encryption research exemption apply only to 1201(a)(1) claims?

MR. BAUMGARTEN: No, your Honor. I think there is provision for a limited application, 1201(a)(2), in fairness—

MR. HART: It relates to the dissemination of the fruits of the encryption research and provides strict limits on qualified collaborators. They have to be people trained or skilled in the art of cryptology, and the legislative history makes it quite clear, your Honor, that when the encryption device or the tools or the fruits of the encryption/decryption research are disseminated indiscriminately outside of the fold of what you would consider to be qualified researchers that the exemption clearly doesn’t apply.

There’s not only scholarly commentary on the subject; we are dealing with some of the statute, but also substantial legislative history to say there has to be a line between using encryption research as a pretext, if you will, and that which really goes to the pejorative of hacking.

MR. BAUMGARTEN: It’s clause 4 of paragraph G, your Honor.

THE COURT: Clause 4. Okay. Thank you.

MR. GOLD: Finally, the defendants claim that the statute applied in the way that we’re asking the Court to apply it violates their rights to free speech under the First Amendment.

Your Honor, this DeCSS, I would submit, is not an expression of anything. It doesn’t communicate any ideas. What it is, and I think the closest analogy, is it’s a burglary tool. It’s like a lock pick. And it has nothing to do with free speech.

We would also point out that there is an awful lot of speech on the websites of defendants and many other websites where DeCSS is offered where long soliloquies are given about the inappropriateness of the copyright laws, the inappropriateness of the Digital Millenium Copyright Act, the anticircumvention act. We’re not seeking any injunction against any of those expressions or statements of opinion and expression of rights. We’re only trying to take out of these websites the thing that says DeCSS that you put your mouse on and click it twice and you have circumvented the protective device on our copyrighted films. That’s all we seek from you, both in the case of posting and also in the case of the linking that I described to your Honor before.

Touching on irreparable injury, I think, again, it kind of speaks for itself here. The plaintiffs have a huge investment in these copyrighted movies, a huge investment of putting out DVDs. The public has a huge investment now in DVD players, and all of this with continued dissemination of DeCSS unabated by the courts will be lost, including a lot of the value of our copyrighted films.

On the other side, what is the injury if a preliminary injunction is ordered? For the time it takes to try this case, they—the defendants—will not be able to post DeCSS and people won’t be able to avoid the safety device on our copyrighted movies. If we lose the trial, they’ll be able to in four to eight weeks or whenever the trial is held. It seems to me that irreparable injury concepts and concepts of equity compel the issuance of a preliminary injunction here, even if the Court felt that there was a material issue as to any merits of the case, as to any point that the defendants have raised because the equities tip so strongly in favor of plaintiff that preliminary injunction be issued until the time of trial.

With that, your Honor, I’ll conclude.

THE COURT: All right. Thank you. Who wants to be heard for the defendants?

MR. KATZ: Your Honor, we had discussed among the defense counsel, with your permission, we would like to handle several issues separately. Would that be acceptable to your Honor?

THE COURT: Sure.

MR. KATZ: With regard to the facts, Ms. Gross, do you want to take that?

MS. GROSS: I think Mr. Levy would like to.

MR. KATZ: I apologize.

MR. LEVY: Thank you, your Honor.

I will discuss briefly the facts in this case because the vast majority of them will have to be fleshed out at the trial stage and that is essentially the difficulty that the Court will be facing with this preliminary injunction, and that is they that it did not have all of the information before it. It cannot have all of the information before it.

As for the basic premise, yes, we know what DVDs are and we have at least some grasp of what DeCSS purports to do and what it says. And I say what it says and what it does because those are two separate things. Part of the issues that we’ll be facing here are the overlap between something it says and something it does. The DeCSS code is just that. It’s a code, it has been posted in various different ways. Sometimes there have been discussions intermixed between the code. There have been notes by different programmers, and the code itself is in and of itself an expression of academic importance; that is to say, the cryptology that those who enmesh themselves and have dedicated themselves to the science of ciphering and deciphering and the study of codes are dependent on the continuing research in this field. And so I would take issue with the concept that this DeCSS code is a lock pick. It is certainly not a lock pick the instant that it is written, and there are cases that suggest that as soon as something is written there is already a presumption that it is speech. That’s certainly the case where the writing is expressive to another and we know that although machine code is difficult to read it can be read by individuals; it’s frequently read by individuals. The same is true for the source code. Certainly I don’t understand source code very well, but others do, and source code can’t even be understood by machines.

Now, the other part is that in between that source code, there are various notes and notations of how programmers arrived at different ideas. All of those are expressive. And finally, the plaintiffs, I think, focus only on the distribution of the speech and have failed to discuss the receiving of the speech, and, in this case, that is a very important counterpart to the dissemination. Certainly one is entitled to disseminate, but others—that is, the public— are also entitled to receive.

Now, the facts themselves in this case are likely fairly complex and fairly convoluted. I say "likely" because the defendants had all of one and a half days to present those facts to the Court, and I understand that that issue has been discussed, but I would like to simply flag it briefly.

THE COURT: With all due respect, counsel, that statement is simply false. So let’s just proceed.

MR. LEVY: Very well.

I think the importance of that statement is that it will require that the Court look very carefully at what is presented to it; that is the extent of the point of my statement.

In addition, we would offer to the Court that there are many useful affidavits on file in the California case of which the Court may take judicial notice and review, and we would be happy to put those items before the Court at the end of this hearing.

THE COURT: Counsel, the order to show cause was signed almost a week ago. Your clients were served almost a week ago. The order required that any papers you cared to submit be submitted earlier this week. The record is now closed, and it says what it says. Now let’s proceed from there.

MR. LEVY: I understand. The record that the Court does have before it shows a request by the plaintiffs to curtail a number of individuals, one of whom is a journalist, from expressing what they have discovered. It is not something that they’ve created; it’s simply something that they have discovered and are attempting to publish to others. I, of course, am referring to the defendant and the website 2600. That is essentially a news organization and that’s their purpose, to offer these things into the public. And Peter Katz will be discussing that issue at greater length; that is, the standing issue and the arguments regarding whether or not these individuals are even properly before this Court.

Additionally, there are a number of legal issues regarding the Digital Millenium Copyright Act and that, of course, goes to the likelihood of success in this case; that is, whether or not at trial the plaintiffs would be able to show what it is that they have of theirs. And Robin Gross will be fleshing those points out, discussing both the applicability of the Digital Millenium Copyright Act to this particular set of facts and also the appropriateness and the constitutionality of that act in general.

THE COURT: Look, I do appreciate the preview, Mr. Levy, but I wish we would get into the discussion instead of the discussion about the discussion.

MR. LEVY: Very well. Then I will pass the virtual pulpit over to Ms. Gross to discuss the Digital Millenium Copyright issues.

MS. GROSS: I think first Peter was going to talk about the proper defendants and the improper defendants.

MR. LEVY: Sorry. That’s right.

MR. KATZ: Your Honor, I’ll run through that quickly for the Court. As I noted, the Court is in receipt of the opposition papers that we had submitted. Judge, we have three defendants here. One is a news organization that, as Mr. Levy had pointed out, 2600.com also is involved in a—it’s a distribution of a quarterly document. My understanding is that they have over 50,000 subscribers and receive approximately 10,000 unique visitors on a daily basis who view information that’s posted on the site.

The defendant who should be named here is 2600.com. 2600 Enterprises, Inc. is a corporation. If your Honor, and it’s not entirely clear from the documents here, but if someone were to go to its website, on the left-hand side, on the bottom left-hand side of the site, they would see it says 2600 Magazine. On the right, they would see the corporate information. And when one goes to what’s known as a DNS registry, which has been annexed to the documents in the order to show cause as referred to "who is" through Network Solutions, there is a registry. The registry indicates that 2600.com is 2600 Enterprises. And the individual who’s named as Emmanuel Goldstein is listed merely as a technical contact. Mr. Goldstein is the defendant in this case. It’s the position under Rule of the Federal Rules of Civil Procedure that Mr. Goldstein is improperly named and it should be, rather, the corporation.

THE COURT: Go ahead. I’m just getting a book.

MR. KATZ: Thank you, your Honor. With regard to Shawn Reimerdes, once again, your Honor, we have information on his website which has been annexed to the order to show cause indicating a Leach Software, Inc.

THE COURT: Before you go on to Mr. Reimerdes, are you telling me that the gentleman you were just discussing, who you said is listed as a technical contact, is not involved in any way in offering to the public or providing DeCSS?

MS. GROSS: Actually, it’s a journalist who was reporting on it on the website.

MR. KATZ: But in terms of providing that document, no, he does not provide the DeCSS. He reports on it. But if you’re referring, Judge, to Mr. Goldstein as involved with 2600.com, yes, he is involved. It’s my understanding that he is an editor and/or reporter of 2600 Enterprises, Inc.

THE COURT: You’ll get your chance later, Mr. Hart.

MR. HART: Thank you.

MR. KATZ: I had mentioned Mr. Reimerdes to your Honor and his involvement of Leach Software referring to defendant Roman Kazan. Two parts to him, Judge, one is that he is listed through "who is" as the technical contact for www.Krackdown.com. We understand they had the link to DeCSS. Mr. Kazan is what’s known as an ISP. He’s a host. His company—actually, that’s how we get involved in the proper party—his company, which is Escape.com, hosts sites. My understanding is that Escape.com hosts approximately a thousand sites and the purpose, his business, is to provide hosting. He does not have actual control over these individual websites and Krackdown.com is the site. However,

Escape.com is the actual host and the distinction is very important, your Honor. When we deal with Mr. Kazan and his corporation, which is very clear on his DNS registry, at the very top is registrant Kazan Corporation, administrative contact Roman Kazan. We say that he would fall also as an improper party, as it should be Kazan Corporation.

THE COURT: I don’t get this improper party concept at all.

MS. GROSS: Perhaps I could explain it.

THE COURT: Perhaps I could finish the point, Ms. Gross.

Rule says that every action shall be prosecuted in the name of the real party in interest. Now, the people who are prosecuting this case are not your clients. They are defendants and they either are or they’re not liable. And so far I don’t have before me an affidavit from any of them saying that we have nothing to do with providing or making available DeCSS.

MR. KATZ: Your Honor, if I could be heard with regard to Mr. Kazan in that he falls under the immunity provided by DMCA which is Title 2, which is entitled the Online Copyright Infringement Liability Limitation Act.

THE COURT: What’s the citation?

MR. HART: 512.

THE COURT: Of the Copyright Act?

MR. KATZ: Yes, your Honor.

MS. GROSS: U.S.C. 17 U.S.C. 101, and then the specific—that’s the Online Copyright Infringement Liability Limitation

Act. MR. HART: 512.

MS. GROSS: Give me one second.

THE COURT: I think I have it in front of me.

MS. GROSS: Section 512(c) limits liability for information residing on systems or networks at the direction of users and limits the liability, for injunctive or other equitable relief, for information of copyright by reason of the storage at the direction of a user, which is exactly what’s going on in this case.

MR. KATZ: Judge, the limitations have about four parts to them under 512(c), the transitory communications caches, storage of information, direction of users and information location tools. The limitation pursuant to 512(c) --

THE COURT: Just a minute. Before we get carried away in the minutia of 512(c). What 512(c) provides, if I’m reading it correctly, is a limitation on liability for infringement of copyright. Am I correct?

MR. KATZ: Yes, your Honor.

THE COURT: Your clients are not being sued for infringement of copyright. They’re being sued for violation of Section 1201. Right?

MS. GROSS: But 1201 is designed to protect copyrighted work.

THE COURT: Maybe so, but it’s not infringement of copyright. Isn’t that true, counsel?

MS. GROSS: I’m sorry.

THE COURT: An infringement of copyright, by definition, is the violation of the copyright proprietors’ exclusive rights as conferred in the Copyright Act. That is not what your clients are charged with, as I understand it. So I don’t see what the applicability of 512(c) to this is at all. Now, if I’m mistaken, that’s the reason I raised the point; I’d like to hear about it.

MS. GROSS: This is a case of first impression.

THE COURT: That doesn’t make it any better.

MS. GROSS: But I think that it’s a jump to say you can’t violate one, or you have to say you have to violate one without the other.

THE COURT: Come again, please.

MS. GROSS: I’m sorry. It seems to me that there’s no direct infringement. If you were not infringing a copyrighted work then there’s nothing that shows how anyone is providing a tool to others that are doing that.

THE COURT: The charge against your clients is providing a device which is a means for circumventing an access limiting factor. The infringement would be done by someone else, although it might be done by your client, it need not be. Nor is the infringement essential to the violation of 1201. Is there some error in that, counsel?

MS. GROSS: I think you need to have—I’m sorry.

MR. LEVY: Essentially, your Honor, our reading of the DMCA, certainly in order to make it a constitutional reading, is that it does not outlaw any type of decryption. It only outlaws decryption that affects copyrighters’ rights, and to that extent the two are read together; that is, it is not the case that as soon as you engage in the science of cryptology you have violated the DMCA, though certainly those raise other constitutional issues. That’s essentially what we are saying. Is that clear?

THE COURT: What you’ve said is clear. It’s just very different from what Congress said.

MR. LEVY: I think we’re working on finding the citation, if the Court will bear with us. It’s a rather lengthy statute. Perhaps we’ll continue looking through that and we can move on.

THE COURT: Okay.

MR. KATZ: Your Honor, at this time, I’ll turn this over to Ms. Gross to handle the DMCA issues.

MS. GROSS: Okay. First I’d like to talk a little bit about the standard for issuing a preliminary injunction, and you have to, as the plaintiffs have pointed out, show a threat of irreparable injury and likelihood of success on the merits or series of questions and balances that equities tip in their favor. So with that as our starting point, let’s talk about injury.

I think it’s important to note, and I’d like to draw the Court’s attention to the fact, that in all of these hundreds of papers that we’ve been deluged with the last couple of days there’s not a single sentence that talks about current or actual harm. Everything in the documents that have been submitted to us only talks about speculative harm, possible harm, potential for harm. I’d like to just draw the Court’s attention to a couple in particular. If you look at the Atwater declaration, let’s see, paragraph, the harm alleged is that the plaintiff would have to abandon DVD in favor of another format, and I don’t think that asking businesses to consider alternative methods is a proper type of harm for a court in order to issue an injunction.

Additionally, in that same declaration, the next paragraph, they talk about plaintiffs’ potential loss and then the sentence ends it by saying it could well be higher and so, again, it’s all speculative, potential, possible, future, maybe harm. If you look at paragraph 16, it says there is even—

THE COURT: Ms. Gross, let me save you a little time. If all of the harm already had occurred, you would be arguing that I shouldn’t issue an injunction because there’s no need for it. Injunctions are issued to protect against threatened harm which, by definition, is future harm.

MS. GROSS: But what I’m saying is this is speculation because it’s all based on if this other thing were to happen, then there would be harm. So they’re skipping a step in between. There’s an assumption that this other thing will happen that will then cause there to be harm.

THE COURT: What do you think people are going to do with DeCSS, put it on floppy disks and use it to fertilize the garden?

MS. GROSS: No, actually, because it wouldn’t fit on a floppy disk, which is another reason—

THE COURT: I stand corrected. Their hard drives.

MS. GROSS: You could put about one on your hard drive in which case it makes a player and your computer becomes your player, and that is actually what is the case here. In fact, this computer program is—

THE COURT: Ms. Gross, is there the slightest doubt that DeCSS can be used to permit one who has it to make unauthorized copies of copyrighted movies?

MS. GROSS: Well, DeCSS, by itself—all DeCSS is a part, a piece of a player that’s under construction. It’s computer code taken from a project where they were trying to build a DVD player, and this is the part of the program that handles the descrambling and the playing and so it itself does not circumvent a right because all it does is play.

THE COURT: Okay. Could you answer my question.

MS. GROSS: I’m sorry. Could you tell me your question?

THE COURT: Is there the slightest doubt that it would permit somebody to copy CSS scrambled material?

MS. GROSS: I believe you could copy it onto your hard drive, but, again, it’s sort of like putting your tape in your VCR player and, yes, your television set, your screen, now has made a copy, analogously. Same like a computer when you put your DVD in, but, again, it’s a copy that you are making only temporarily to be played on your player.

THE COURT: And once you have that on your hard drive, can’t you churn out as many of them as you want?

MS. GROSS: Perhaps your hard drive or your computer will do that, but this particular program is separate from what your computer will do or not do, you know. That, again, is speculation. It’s saying that using this program in conjunction with something else, and even if that is not the case—

THE COURT: Now, look, Ms. Gross, please. I really think that it’s a mistake to assume that you’re talking to a moron. On one of your clients’ websites, it says, and I quote, "Yes, you can trade DVD movie files over the Internet."

Now, is that true or not?

MS. GROSS: Actually, I don’t—I’m not aware of anyone who is doing this and particularly because it’s impossible for practical purposes. It would take over 300 hours.

THE COURT: So why do you think your client said that?

MS. GROSS: Well, it could be, it could be a source video, something that someone else has authorized. It doesn’t have to be an unauthorized movie that he’s talking about. There’s no assumption that it’s illegal copying or illegal trading.

THE COURT: And why do you suppose right after that he put on his website: "Notice the DVD Copy Control Association," which I understand to be the movie industry here—is that right—"are cock suckers"?

MS. GROSS: I think that while that kind of language is certainly inappropriate, nonetheless, it is of itself not speech that can be enjoined, and I think if my client were present to answer that question, he would say it’s because of all the cease and desist letters going out over the Internet and shutting websites down based on fear of litigation, and a lot of people are very upset because they feel their civil liberties are being trampled on, and that’s the reason for the statement. And I’m not going to defend the statement.

THE COURT: Ms. Gross, if it were the case, as you seem to be trying to imply, without saying, that DeCSS does not permit unauthorized copying of copyrighted movies recorded on DVDs, I would imagine you would have said that to the plaintiffs and they would have taken you up on the offer to demonstrate it and they wouldn’t have bothered hiring a high-priced law firm to come in here and sue you all. I don’t think it’s for exercise. That doesn’t mean they’re right, but nobody has said under oath before me that the assertion that you can copy DVDs using this software is false.

MS. GROSS: I think that it’s important to look at the actual wording of the statute in question here, and we’re talking about Section 1201(b) and they say no person shall manufacture, etc., offer to the public, etc., for the purpose of circumventing protection that effectively protects a right of a copyright owner. So I think it’s important to note that what we’re talking about here is a circumvention that protects a right of a copyright—

THE COURT: I’m sorry. Tell me exactly where you’re reading from.

MS. GROSS: Section 1201, which is the circumvention copyright protection system.

THE COURT: 1201 what?

MS. GROSS: 1201(b), additional violations.

THE COURT: All right.

MS. GROSS: Then (b)(1)(A) we’re talking about here—

THE COURT: Now what about—

MS. GROSS: What we’re talking about—

THE COURT: Ms. Gross, don’t get carried away. What about (a)(2), which is the statute you’re being sued under? I mean, I’m sure the Internal Revenue Code isn’t a big problem for you on this either.

MS. GROSS: Because—

THE COURT: It says that you can’t offer to the public any technology, product, service, etc., that’s primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a protected work. Now, is there any doubt that CSS protects access to a copyrighted work? Is there any at all?

MS. GROSS: Agreed.

THE COURT: Is there any doubt at all that DeCSS is a device that circumvents CSS?

MS. GROSS: It does descramble it.

THE COURT: Okay.

MS. GROSS: But that—

THE COURT: With that established, let’s proceed.

MS. GROSS: But it’s not primarily designed to do that. It’s not designed to be a player. This is software that was taken from a project that was being built for a new DVD player. So it’s just a component of a player. And so, therefore, it was not primarily designed to circumvent. It was designed to act as a player and the player is not the right of a copyright owner. Copying is not prohibiting from playing.

THE COURT: Is it not an exclusive right of the copyright owner to make copies of the copyrighted work?

MS. GROSS: It is. It is, except for the fair use exception, and it’s very clear in copyright law that copyright—that owners of legitimate copies have a right to make fair use, and that’s not something that’s in dispute here. And so when you put this DVD in your computer, you’re making a fair use. You are playing the copy that you have. You have to be able to put it on your computer in order to see it on the screen. So, yes, a copy technically has to be made, but only for the purposes of playing. It’s not something that can practically be used to make lots of copies. It’s not possible.

THE COURT: And fair use is a defense to infringement, right?

MS. GROSS: That’s right.

THE COURT: It’s not a defense under 1201, is it?

MS. GROSS: But we’re talking about—we are talking about something that is primarily designed or produced for the purpose of circumventing a right, and so it is not a right to prevent fair use. Copyright owners do not have the right—

THE COURT: You’re quoting the wrong statute again, Ms. Gross.

MS. GROSS: I don’t believe so. This is the statute in question here.

THE COURT: Let me rephrase that. You’re quoting the section of the statute they didn’t sue you on. You’re not quoting the section they did sue you on.

MS. GROSS: But, see, they don’t have a right to stop the fair use here, so this isn’t something that—

THE COURT: Under (a)(2) they don’t need to. That argument might have some merit if it were a (b)(1) suit or a (b)(2) suit, but it isn’t.

MS. GROSS: Okay.

THE COURT: Okay. So what else?

MS. GROSS: You have to read the two together because (b)(A)(2) says as used in this section. So (a)(2) is simply the defining criteria for (a)(1).

THE COURT: No. Actually, you’re reading (a)(3) now.

MS. GROSS: (a)(3)?

THE COURT: That’s the one that starts with "as used in this subsection."

MS. GROSS: That’s (a)(2).

THE COURT: No, that’s (a)(3).

MS. GROSS: Right?

THE COURT: (a)(3). Look, if you have other points about the statute, you better get to them.

MS. GROSS: I’m sorry.

MR. LEVY: I apologize, your Honor. Some of the difficulty here is because we are all using different copies of the statute. There might be some confusion. We’re trying to review what the courts have said and ensure that we’re all on the same page, and Ms. Gross is madly flipping through our version of the DMCA to make sure that we understand where the Court is coming from and also what we’re saying.

THE COURT: I’m coming from the United States Code.

MS. GROSS: Okay. Well, I think it’s important—I think it’s important to note some of the clauses that are specifically mentioned in this same code section.

THE COURT: I’m ready to listen to you.

MS. GROSS: It specifically says, if you read 1201(c), it basically says nothing in this section shall affect the right of, including fair use, under this title. So this section is saying it doesn’t affect fair use and these people are making fair use.

THE COURT: Ms. Gross what you did was to read about half the words of that paragraph.

MS. GROSS: I can read the whole one, but I picked out the ones—

THE COURT: That helped you. What you did is left out the ones that hurt you. It says, "Nothing in this section shall affect rights, remedies, limitations or defenses to copyright infringement"—those are the words you left out—"including fair use." In other words, were you being sued for copyright infringement, nothing here would take away your fair use defense. But you are not being sued for copyright infringement.

MS. GROSS: If there’s no copyright to violate, how is a device being enjoined to protect that right?

THE COURT: Ms. Gross, if you have another point to make, you better get to it.

MS. GROSS: I think at this point I will turn it over to—Allonn will talk about the First Amendment issues.

MR. LEVY: Your Honor, I’d like to discuss one final point on the likelihood of success, which touches upon the First Amendment issue, which is essentially, if we read this statute with the type of breadth that I think that we’re talking about here, that essentially what we’re saying is that any type of computer code that decrypts something is illegal, that would be an unprecedented disruption of our First Amendment rights to, in this case, participate in or in any way discuss a totally legitimate area of educational work. And that is encryption.

Cryptology has been around for generations. It’s incredibly important. There are thousands and thousands of individuals in this country who dedicate their entire lives to learning, understanding, and bettering this very important field. I think that if we read the DMCA as saying that—that is, that it does not matter what it is that you’re decrypting, that it’s simply the act of decrypting itself as put in computer code—that is an impermissible and thoroughly unconstitutional reading of that statute, which, of course, for our purposes—the only reason that’s important for our purposes, it would mean that the plaintiffs cannot succeed on the merits of their case, and I’ll just flag that point very quickly.

Now, the other First Amendment issues come into play for this particular hearing. This particular hearing requests preliminary relief, and the relief that it requests is a removal from, among other things, a press site of what is essentially offending speech. Now, plaintiffs’ counsel points out that there are many words on that site that are rude and are inappropriate. Of course, we have the Cohen case, which is the illustrious or famous draft case, and I’m sure the Court is aware of that point. We all have well ingrained in our history that it is permissible to be rude.

THE COURT: Look, Mr. Levy—

MR. LEVY: That is admittedly a side point because they’re not trying to enjoin—

THE COURT: It’s a nonpoint. They’re not talking about that.

MR. LEVY: True. Admitted, to the extent that that’s not the relief that they request. I merely bring it up because we ought not get lost in the fact that because these folks may be are a bit irreverent we should jump to the conclusion that they are bad or they are doing something improper. That’s the only purpose for my comment on that.

The matter that they are attempting to suppress, however, is the DeCSS speech in its various forms, and, as we’ve discussed, that is information that is readable by individuals. Indeed, both from the standpoint of those involved in cryptology and also now because of the various lawsuits involved, to the wide public, this matter has become a public issue. It is a matter of public concern and the individuals that are trying to suppress this are actually trying to suppress ideas.

Now, the point here is that in order to have a free discourse and a free discussion, you must be able to reference things. Drawing on my limited experience, I can only address some of the facts that are in the California case. Here the San Pedro Mercury News is our sort of local news. It’s very well respected and it has also links to these sites because it’s a matter that should and is being discussed in public forums. Now, to step in and stop that speech, I would submit to the Court—

THE COURT: No one is asking to stop any speech about this issue. What is being requested is an injunction preventing the dissemination of the DeCSS program.

MR. LEVY: Your Honor, respectfully, I would submit to you that the link itself is speech. Now, if you remove the link, are we really to stop telling people where to go to get information? I would submit that that’s improper. The code itself is also speech. I cannot cite the Court directly to the appellate Bernstein decision which is on review, but certainly the arguments are the same. And, additionally, we have guidance from Bernstein one, which is noted in our papers, that has very carefully reviewed this issue and found that the code itself is in fact speech. Indeed, in our case—

THE COURT: But, Mr. Levy, let’s suppose that’s true. That does not mean you win, does it?

MR. LEVY: It does not.

THE COURT: So let’s get on to the more important issues.

MR. LEVY: But it does give a strong presumption that we win.

THE COURT: Let’s just explore that. Suppose you opened a hamburger stand and you put in front of it two golden arches to express something about your hamburgers and you put up a big sign that said Levy’s McDonald’s to express the idea that your hamburgers were as good as theirs and you were sued by McDonald’s for trademark infringement. Now, do you think that if you went into court and said, Well, I’m just speaking out here and conveying an idea that that would get you even remotely partway down the first baseline?

MR. LEVY: I think it would get me partway down and I think I would be stopped partway down. I think that what the Court would do is it would hold a full hearing on that issue. I think that there would be evidence adduced on both sides and if, indeed, those arches were found to be a property right and that property right was stolen, then the Court would say, Well, perhaps you have speech here, but you don’t have protected speech here. And so the prior restraint doctrine does not apply.

But that’s not what we have here. We don’t have stolen speech. We have speech that was independently created, we believe, we suspect. And we have commentary on that speech. And I should point out that when I say "commentary," I also mean within some of the source code, and there have been postings all over so I cannot tell the Court which one is which. But there are discussions within the source code reminding the Court that source code is intended for programmers only, it does not run on a machine, that discusses the code.

THE COURT: But these would be nonexecutable program notes, right?

MR. LEVY: That’s correct. Now, I suspect that because—

THE COURT: And when the program was compiled, the programmer’s notes would not be compiled into object code, right?

MR. LEVY: That’s correct. That is correct.

THE COURT: Is anybody trying to restrain the posting alone of programmer’s notes without the source code, the executable instructions?

Mr. Gold?

MR. GOLD: No.

THE COURT: No. Let’s move on.

MR. LEVY: The notes are intermingled within the source code and they are commentary within that source code, so if you suppress the source code, you have suppressed—

THE COURT: But nobody’s trying to stop you from disconnecting the programmer’s notes from the compilable executable instructions and doing whatever you want with the programmer’s notes.

MR. LEVY: True, but you lose access to the programmer’s notes as soon as you lose access to the source code. But if you suppress the source code, you have also suppressed additional speech.

THE COURT: Counsel, that’s simply a bald assertion and we all know it not to be true. I would take judicial notice that it’s not true.

MR. LEVY: I’m sorry?

THE COURT: I said we all know that isn’t true and I would take judicial notice, if I needed to, that it isn’t true.

MR. LEVY: Judicial notice of the fact that—

THE COURT: That the programmer’s notes are available to whoever has the source code and even if you were enjoined from disseminating the source code itself, as distinct from the programmer’s notes, they’re not going to vanish.

MR. LEVY: I’m sorry, your Honor. I actually have a technology expert with me. Would the Court like to or would they agree to hear a very brief statement on this point from that expert?

THE COURT: No.

MR. LEVY: I’m sorry?

THE COURT: No. Let’s go on.

MR. LEVY: As an example, and by way only of argument, Frank Andrew Stephenson, who is one of the individuals who created the LVD [sic] project, which is the player that eventually made this playable on Linux, was able to create his innovations by reading the source code and the expressions within that source code. And I use that to show the Court that, first, the two aren’t inseparable—that is, the source, the bits of code and the programmer’s notes—and, second, to show its utility; that is, that there is a very real need and a use for the posting of this code.

Now, going back briefly to your Honor’s analogy of the golden arches, we do not have a situation here where there is, if you will, stolen speech that has gained a property value to it. What we have is allegedly offending speech that may run counter to a state—I’m sorry, a federal provision.

THE COURT: Let’s start off with the fact that your premise about property rights and trademarks is really highly inaccurate and the basis of trademark protection lies not in some theoretical property right and the senior user, but rather in the fact that the junior user’s use of the mark in circumstances where it is likely to lead to confusion in the marketplace ought to be enjoined in the public interest. Now, you’re welcome to go on from there, but the premise of your analysis is wrong.

MR. LEVY: I think that that’s an excellent point. I used the term "stolen property" because it’s easier for my feeble brain. But, yes, the point and what the courts generally hinge on is that ability to make a mistake. That is, you’d ride into the burger stand, you see the golden arches, you think, Oh, McDonald’s, and you walk in.

There’s no such danger of mistake here. It’s a completely different type of speech, and I would submit that we are not permitted to carve out a new exception for speech that simply would seem to run counter to a federal provision. In fact, I would cite the Court to the DMCA, and I shall work a bit harder to try to get the letters correct here. We are on Section 1201. I believe this is (c)(3). And again—I’m sorry. It’s (c)(4). And this, again, is in regard to the entire act, not a certain portion of it. It says, "Nothing in this section shall enlarge or diminish any rights of free speech or the press," which is involved here, "for activities using consumer electronics, telecommunications or computing products." And that is the portion in its entirety.

So it’s very important that we not use this particular statute to create a new exception to the prior restraint doctrine. And I submit to the Court that the evidence that’s been put before it—that is, as the Court noted, exclusively that of the plaintiff—does not come close to raising to the level of national security and the like that we have in the Pentagon papers and the Progressive case and other similar cases. Certainly using the Progressive case, if we cannot even do a preliminary injunction to enjoin seriously dangerous speech such as the H-bomb instructions, because it is speech after all, as well as potentially classified military information, we certainly ought not issue a prior restraint on the manner in which DVDs work. The interest to the public is simply not that important.

Now, if we are incorrect, if our analysis of the DMCA is wrong, then that can be proven at a trial, but certainly not before that. And I would submit to the Court that this line is a rather dangerous one of going down, and attempting to reach this decision prior to the trial in that it will seriously chill not just the speech rights of those who are in this suit but it will do the same for other individuals who post information on their websites because, again, assuming that there is some type of original sin here, assuming that there is a problem with the DMCA, these individuals didn’t cause it; they merely found something and they put it on their websites. I think that when deciding how we would like our Internet policed we ought to be very careful to ensure that we retain our traditional rights to express ourselves freely and to provide others with information.

THE COURT: Would you say the same thing if they posted the text of a copyrighted book?

MR. LEVY: Likely not. And, again, though I might say it at the preliminary stage, and certainly there are several very interesting and illustrative Law Review articles that discuss exactly this problem, and that is that courts may have accidentally run afoul of prior restraint issues in some copyright cases because they did not wait until a full and final hearing is done, they did not satisfy themselves that indeed this does fall within the copyright exception, and instead they rushed forward in a rush to judgment. And I really hate using that term, following the OJ Simpson case, but I feel that I have to in prior restraint cases, that they have rushed to judgment and they have accidentally restrained speech where they perhaps ought not have. And as one of many illustrations, I would cite the Court to an interestingly article, 48 Duke Law Journal 147, which is freedom of speech and injunctions in intellectual property cases.

Now, this argument is exclusively aimed at the preliminary injunction hearing. As for this argument only, defendants could be 100 percent wrong on everything else, but as for the restraining of this speech prior to it reaching the intended audience, courts must exercise the highest diligence possible.

In fact, some reasoners, of course, do not particularly agree but are nonetheless helpful, have reasoned that the only reason for the First Amendment is the prior restraint doctrine. It is that important. It essentially allows courts, and certainly I would not suggest that that would be the case for your Honor, but it allows courts to be make mistakes. It says, Well, we are going to make a judgment about speech here. That’s that we allow it to reach its intended audience first, we take our time, we look at the information carefully, if it is wrong, then the plaintiffs have their remedy, which is—

THE COURT: Let’s suppose, counsel, that your client had broken into the vault at Coca-Cola and stolen the formula that they’ve protected for the last hundred years and somehow Coca-Cola discovered that they were going to publish it in the Atlanta Constitution, tomorrow. Would you make the same argument about no preliminary injunction, we have to have a full trial?

MR. LEVY: I likely would, because there, the danger that the court is simply wrong is much too great. If the information is stolen—I’m assuming that we’re assigning a property right. That is, if, as the case I believe is, for Coca-Cola, there is simply, it’s simply a trademark case, then my answer—I’m sorry, a trade secret issue, then my answer would be a resounding no. They have an absolute right to publish that. Not only should there be a prior restraint, the case would likely go in favor of the Atlanta press. But assuming that the information itself was somehow wrongful, that it was unprotected for some reason, then, yes, a prior restraint would likely still be inappropriate because you must prove that the speech is wrongful before it can be restrained. It has to be done with the utmost care, and a preliminary injunction is not the way in which that ought to be done.

Does that answer the Court’s question?

THE COURT: It does.

MR. LEVY: Okay. Now, the other part of the free speech issue is that of those who are receiving speech.

Again, as we’ve discussed previously, there is a wide body of academic interest in this case completely separate from the plaintiffs’ economic desires. There are very high-level individuals who deal exclusively in cryptography who are fascinated by this particular topic. And in order to allow their field to advance, they must have the ability to exchange information amongst themselves, otherwise you arrive at a situation where you simply do not have the means in which to produce either good encryption or good decryption, both of which, I submit to the Court, are very vital to this country.

Now, the importance of that fact—that is, whether or not they are able to get this information, certainly as has been cited in papers—there is case law supporting that there is a First Amendment right to receive speech in addition to the First Amendment right to publish speech. So here we have an issue where both interests are at stake. And, again, in the interest of prudence, I would suggest that the Court must not issue the preliminary injunction, instead must weigh and look at this information carefully, thoroughly, with affidavits before it, and weigh the information before restraining any free speech rights.

I would also point out to the Court, and this is beginning to move away from the free speech argument and simply into general preliminary injunctions, and that is the issue of harm. Now, when looking at the relevant harm that might be caused by a preliminary injunction, I would submit to the Court that not only does this harm not tip in favor of the plaintiffs, quite to the contrary, it tips substantially in favor of the defendants. And I submit that to the Court on the following:

The plaintiffs themselves have, as has been briefly discussed previously, offered conjecture as to why there would be harm. They have offered no testimony that DVD sales have dropped. They have offered no testimony that piracy has increased. They have offered no testimony showing that that is actually what is going on here—that is, that this is a piracy tool—when, in fact, all of information suggests the contrary. It is a Linux tool that was made by individuals who have no interest in piracy. Their exclusive interest is in being able to play DVDs on their boxes.

Now, in addition to the lack of harm on their part—and I’m sorry, I should step back for just a moment because I recall that the Court previously addressed the idea of harm, and so I will point out to the Court that this is not a situation where this code was put out on the web yesterday. This is a code that has been out on the web since October, at least. That is, that’s information that we have.

Now, the information does not deal with—I’m sorry. Let me step back. The code has been out since October and between October and now, if there was this immediate irreparable harm, certainly it would have already shown itself. Certainly over in excess of four months, something would have happened if we have this immediate irreparable harm, this danger looming over our heads. There is no information that there is something that they’ve made this more dangerous today. No. The preliminary injunction seeks to restrain just these three people from continuing to disseminate the information. The plaintiff has failed to show why there is a difference today from four months ago.

THE COURT: First of all, it was three months, counsel, and, second of all, the argument that I take from their papers—

MR. LEVY: I apologize, your Honor. I missed the first part of your statement.

THE COURT: First of all, it’s three months, not even quite three months, since October 25. At least on my calendar, it is. And, secondly, I take from the plaintiffs’ papers the following: It’s their submission, as I understand it, that initially the dissemination on the web was fairly limited, that they protested to ISPs, and that in many, if not most, cases, the ISPs immediately pulled the material. The lawsuit was then brought in California. That provoked an enormous backlash in the hacker community, led to enormous numbers of postings and frenzied efforts to mirror and otherwise disseminate the program in what would appear to be an attempt by your clients and others to get this so widely disseminated that the genie never could be put back into the bottle and that, basically, that last part has happened in the last three to four weeks.

Now, that’s essentially what I drew from the papers. If there’s something wrong with that argument, I’m willing to listen to it. But for you to tell me they haven’t addressed the point or have offered nothing is the kind of hyperbole that doesn’t advance your case.

MR. LEVY: I thank your Honor for correcting me on that point.

I would point out a number of issues. Now, first, the concept of a limited exposure on the web, I would submit to the Court, is unsupportable. The web by its nature is a forum that reaches millions, and I would draw the Court’s attention to the extensive discussion in ACLU v. Reno cited in defendants’ papers. So I would reject the notion that a piece of text that is posted, if you will, in the village square and is electronically replicated in every other village square has somehow been disseminated in a limited manner.

As for the factual issue that it is three months instead of four months, I’m informed by counsel that the Court is correct. October 6 apparently is the first posting that we’re currently aware of. There may have been ones before, but we do not have that evidence before us. And I think the Court also flagging another related issue that although it may have been addressed since, as I have informed the Court, I have not been able to carefully review all papers, I would offer this as an affirmative argument, and that is the futility of enjoining three individuals from posting this information on their websites. Certainly the Court need not undertake a futile task, and, by the plaintiffs’ own papers, this information is posted in tens of thousands, possibly hundreds of thousands, of other sites, not just throughout this country but throughout the world. There are serious questions of the reach of this Court; that is, whether or not the preliminary injunction could be enforced. And I’m sure counsel will suggest ways in which one could go into another court and request leave that the sister court in another country comply with your Honor’s ruling, but I would suggest to the Court that when one thinks of other countries such as Iran and Syria, I’m not convinced that that would actually work and certainly I know of no precedent where it has worked.

And the futility argument is particularly important when one links it to the free speech issues for individuals. It goes to the question of harm to the public and harm to these defendants, and I shall focus on the harm to the public because to me it is so glaring. I’ve discussed briefly the importance of this information to other researchers, to other cryptographers, and I have discussed it in sort of the microcosm of scholarly academia, but I have perhaps not addressed it on the public debate side.

THE COURT: Counsel, we’re going to have to wrap this up sometime.

MR. LEVY: Very well.

THE COURT: And I’m going to give your side another six or seven minutes.

MR. LEVY: Very well. I will, in that case, do things a bit more speedily. I think that the preliminary injunction that has been requested is, although it may appear to be limited when one looks at the order and when one looks at the individuals that have sued, the types of rights that it attempts to curtail are of such importance that this Court ought not grant the relief that is requested, that it ought not curtail the discourse that is currently taking place, and that instead, it allow this matter to proceed to trial where the information is more fully briefed, where the individuals who are far more technically knowledgeable than, I would submit, I am are able to educate the Court and the attorneys as to what the information actually does. We anticipate that that would show that the DeCSS system was always intended to be a player, that neither of these individuals or others were sort of seagoing pirates; they were simply individuals who wanted to play DVDs that they purchased on their Linux boxes. They could not do that without DeCSS; they can do it with DeCSS.

As for the concept that it may be distributed over the web, a DVD holds 5.2 gigabytes of information. The ability to distribute that type of information over the web is nonexistent, that is, in a usable manner. Certainly if one wants to take the 300 hours, it’s possible, though wouldn’t one not then just go down to the store and spend $20.

The other point I would draw the Court’s attention to is the existence of compact disk technology, meaning musical technology is also digital technology. Currently, it is very simple to duplicate compact disk technology. However, there is not massive widespread harm right now. The companies are continuing to function properly, and while certainly piracy is a problem in its large-scale capacities, often in other countries, there are criminal laws that deal with that. And to put forward that this speech that is being posted is what will cause a landslide or barrage of additional piracy issues is, I submit to the Court, simply inaccurate, or, as the Court put it, hyperbole.

And with that, your Honor, I would turn it over to Mr. Katz if he has any additional points to make.

MR. KATZ: No, your Honor.

THE COURT: Okay. Thank you.

Mr. Gold, delay and futility is what you should address.

MR. GOLD: Your Honor, until several weeks ago, we did not believe that we needed to come to court in order to protect our rights. One of the problems with doing that in the hacker community is that if you challenge them a little, you really turn them on, and that was a major consideration for us. And things seemed to be going to the point where these DeCSS postings were substantially diminishing. But after California, we have no option, and we formed the belief within a week after the publicity of that decision on the TRO that we better come or we’re going to lose our interest in this encryption device, and we’re turning to the last protection that we relied on to safeguard the value of our copyrighted material, and that is the Court’s enforcement of the existing statute.

People are violating it. They’re madly going about trying to get people to mirror it so that the number of suits that we’ll have to bring to bring this under control will increase, in the hope that it will turn us off and destroy this system. But it won’t turn us off and we’re going to pursue it in every place that it comes up because of our enormous investment in it and the investment of our public in those players. We didn’t think we had to do this and we didn’t want to do it, but we’ve got to do it now after what happened in California.

We believe that if the Court enforces this, it will substantially stop in the United States. People, most people, don’t like to violate the law, if they see the courts are taking it seriously and are going to enforce it. These are sophisticated people who are doing this. And we honestly believe that we still, this week, have a viable protective device, and we don’t think we’re going to have it very much longer if the courts won’t enforce the law.

THE COURT: All right. Thank you.

MR. LEVY: Your Honor, if we can address two points very briefly.

THE COURT: Very briefly.

MR. LEVY: Okay. I’ll have Ms. Gross do the first point.

MS. GROSS: I just wanted to refer back to the DMCA and the code section that we’re talking about. 1201(a)(2) and I apologize for referring to the incorrect section before, but I’ve got the correct one in front of me now, but I think it’s important to note that (A), big letter (A), capital letter (A), of that particular code section says it needs to be "primarily designed or produced for the purpose of circumventing a technological measure." And I would submit to the Court that if we had an opportunity to develop the facts and to present the Court with an adequate record to make its determination, that the primary purpose of this software is to play DVDs and not to copy—

THE COURT: Let’s assume you’re right about that.

MS. GROSS: Okay.

THE COURT: How does it get you home under (2)(A)?

MS. GROSS: Because it’s not covered under (2)(A) then.

THE COURT: You said it, but I don’t see why that follows at all.

MS. GROSS: Because it’s not primarily designed for the purpose of circumventing the technological measure that controls—

THE COURT: Of course it is. The whole point here is that CSS is designed to protect against even the playing of a copyrighted DVD except with a player using a licensed CSS key. And if you go ahead and put out DeCSS for the purpose of playing it without using a player with the licensed technology, you have done it primarily for the purpose of circumventing the measure. Isn’t that true?

MS. GROSS: I think that you’ve exactly hit on the point here, but I think that I want to disagree with you in this broad interpretation of the statute. I don’t believe Congress intended to give copyright holders the right to decide which players would be acceptable for playing their works. In fact, I don’t think Congress has the power to give copyright holders that degree of control on what machines their work can be played.

MR. LEVY: In essence, your Honor, that broader reading, which I understand how the Court was reading it, would mean that licensed players run afoul of the DMCA, and certainly that’s not Congress’ intent. That is to say, if it really is the case that any decryption is unlawful under DMCA, then licensed decryption is also impermissible and that, of course, one would hope, is not Congress’ intent.

MR. HART: Your Honor, may we—

MR. LEVY: Ms. Gross, do you have any other—

THE COURT: But the problem, of course, is that the phrase "circumvent a technological measure" is defined to mean any decryption without the authority of the copyright owner. So the statute seems to say on its face precisely what you say Congress can’t have meant.

MS. GROSS: Congress has limitations in what it can do under the law, and I don’t think that Congress intended to give copyright holders the power to say your work can play on this device, that device, but not these other devices. I think that really needs far more research and far more filling out the record on that.

Hello? Hello?

THE COURT: There’s something wrong with your connection, counsel.

MS. GROSS: Hello?

THE COURT: All right. I think I need to give Carol a break here. She’s been working very hard. We’ll recess for ten minutes. You, Mr. Katz, can try to reach your folks in California and get them plugged back in, and we’ll reconvene at to five and I’m going to give you a decision.

(Recess)

THE COURT: Are you back, Ms. Gross?

MS. GROSS: Okay.

THE COURT: Mr. Levy?

MR. LEVY: Yes, this is Allonn Levy.

THE COURT: Fine. I am prepared to give you a decision now. Although given the nature of the case, I intend to file a written opinion in due course, I am persuaded that it is important that I rule immediately in all the circumstances, so I am going to make a summary statement of my reasoning, but I expect to elaborate on it as promptly as I can.

I should begin by clarifying the record that is before me and the manner in which we came to this point. The plaintiffs filed this action, if memory serves, on January 14. Is that right? And I signed an order to show cause on that date bringing on this motion for a preliminary injunction, initially for 11:00 this morning. The order required prompt service, which was made, and it required the filing of any affidavits or other answering papers on behalf of the defendants earlier this week.

On Wednesday, if memory serves, I received an answering memorandum from the defendants but no affidavits. I also received a request for an adjournment, which was opposed by the plaintiffs. I held a conference call on the record on Wednesday with respect to the application for an adjournment.

The defendants’ position was that they were not prepared to consent to any interim relief in exchange for the adjournment they requested. The plaintiffs’ position was that they were not prepared to grant the adjournment in view of what they conceived to be the threatened harm to their clients, absent interim relief, and so I denied the adjournment except to the extent that I moved the hearing until 2:30 this afternoon to accommodate the defendants’ counsel.

On Wednesday, the defendants indicated to me also that they were in the process of preparing one or more affidavits and stated that they intended to file them before the hearing. They did not do so. In consequence, the record before the Court consists of plaintiffs’ moving papers, the defendants’ answering memorandum, but no evidentiary submission by the defendants whatsoever, and reply papers submitted today by the plaintiffs.

During the course of the proceedings, both in the defendants’ memorandum of law and in the course of assertions of counsel this afternoon, a great many factual contentions and assertions have been advanced. They include such assertions as the contention that Mr. Kazan is an Internet service provider and that Krackdown is a website run by a press organization, but there are a great many others. None of those assertions is supported by any evidence whatsoever. The evidence before me is that submitted by the plaintiffs, and it is on the basis of the evidence before me that I am obliged to rule.

Coming to the matter before me, the technology, at least at the level that it need be understood for this purpose, is pretty simple. The plaintiffs record copyrighted motion pictures on DVDs, which is an acronym for, I think, digital versatile disks. DVDs with these movies are data files that may be transformed into audio and video by appropriate computer equipment. In order to prevent unauthorized copying, the plaintiffs employ something called Contents Scramble System, or CSS, which is an encryption-based computer and authentication system that requires the use of appropriately configured hardware, such as a DVD player or a computer DVD drive, to decrypt, unscramble, and play back motion pictures on DVDs without enabling the user to make a digital copy of the DVD movie.

In late October of 1999, computer hackers apparently cracked the DVD encryption system used by the plaintiffs and began offering on the Internet a software utility called DeCSS that enables users to break the CSS copyright protection system and thereby not only play, but copy and distribute, digital copies of copyrighted DVD movies.

The plaintiffs initially responded by remonstrating Internet service providers on which sites engaged in this activity were located. In some substantial number of cases, the offending materials were removed. As 1999 drew to a close, someone, not the plaintiffs, brought a trade secret action relating to this technology in a state court in California and moved for a temporary restraining order and a preliminary injunction. The state court judge denied the TRO, I gather without explanation. The preliminary injunction motion, I am informed, was heard this week and has not been decided.

The commencement of the action in California, and particularly the denial of the TRO, led to a substantial increase in attempts to disseminate DeCSS on the Internet. From some of the evidence submitted by the plaintiffs, it appears clear that there are those in the hacker community and in the Internet community, more broadly, who took the litigation in California as a throwing down of the gauntlet. There appears, although it is not necessary to my decision, to have been an obvious effort in at least some quarters to disseminate DeCSS as broadly and as quickly as possible to make it difficult or impossible to put the genie back in the bottle through legal means.

If there is such an effort, and there appears to be, the defendants appear to be part of it. According to plaintiffs’ evidence, it appears that Mr. Reimerdes is the author and proprietor of a website that is disseminating DeCSS. Mr. Kazan is listed as the technical director for a second website which is so engaged, although plaintiffs inform me that he seems to have taken DeCSS down off the website since the commencement of this action.

I note in that connection that that does not moot the claim against him. The W.T. Grant case in the Supreme Court makes clear that the voluntary cessation of such conduct does not moot an application for an injunction.

The defendant Corley, under the pseudonym Emmanuel Goldstein, is listed as the administrative, billing, and technical contact of the third such site.

The defendants argue that they are not the real parties in interest, but the argument is both misguided and beside the point. It is misguided because Rule requires that actions be prosecuted in the name of the real party in interest. It does not speak to defendants. It is beside the point because the issue here is not whether these three individuals are or are not real parties in interest in the sense they use the term or whether they are the proprietors or the moving forces behind the websites in question. Rather, it is whether the plaintiffs are likely to show that they are engaged in violating the Act. If they are, they may be subject to injunction. If they are not, they, of course, would not be.

They all had the opportunity to submit affidavits indicating they had nothing to do with these activities or explaining the nature of their conduct and why it is not covered. They elected not to do that. I draw the inference from the materials submitted by the plaintiffs and from defendants’ silence that they are engaged in the offending activities. That, of course, is a matter that they are free to contest at trial. But for present purposes, that is my finding.

The objectives of the websites with which they are connected are reasonably clear. The site with which Mr. Reimerdes is connected invites users to share their DVDs with the world by copying them and, as I mentioned during the course of argument, it contains a notice reading, and I quote: "The DVD Copy Control Association are cocksuckers."

The site with which Mr. Kazan is connected makes it fairly clear from materials plaintiffs have submitted that it is engaged in something approaching a vendetta against the plaintiffs in this case. It inveighs against the plaintiffs’ efforts to prevent unauthorized copying of their material and makes clear its belief that it has a right to decrypt the plaintiffs’ products and disseminate.

The standard that governs the availability of preliminary injunctions in this circuit is very well established. The movant has to demonstrate a threat of irreparable injury and either a likelihood of success on the merits or the existence of serious questions that are fair ground for litigation and a balance of hardships tipping decidedly in its favor.

In this case, it is clear to me that there is a threat of irreparable injury. To begin with, it is very well established in intellectual property cases that threatened infringement of copyright, trademark, or patent rights or violation of trade secret rights is presumptively irreparable injury. I made the point forcefully with defendants’ counsel that defendants are not here charged with copyright infringement. That is true. As a technical matter, therefore, the presumption to the point that it has developed up to now does not apply. Nonetheless, it is plain that the dissemination of software that would circumvent the copyright protection on the plaintiffs’ copyrighted works does involve a substantial and immediate threat of irreparable injury, and that requirement is satisfied.

I have taken into account the line of cases in this circuit that has indicated that in some circumstances undue delay in seeking a preliminary injunction may either defeat a presumption of irreparable injury or, at a minimum, undermine the plaintiffs’ claim to irreparable injury. The cases make clear, however, that undue delay exists where the delay in fact is unexplained and unjustified. It does not exist where a party is unaware at the outset of the scope of the threat. It does not exist where the party pursues in a reasonable fashion and with reasonable dispatch other means of attempting to remedy the problem without coming to court. There are other circumstances that are relevant.

I find that there was no undue delay in this case. The plaintiffs acted reasonably in seeking to deal with this problem by first approaching the ISPs. They met with some success. They were not aware then that the problem would be as widespread as it has become. I accept that the problem has become much more widespread since late December and that their getting into court by January was plenty fast enough.

That brings us to an evaluation of the plaintiffs’ likelihood of success on the merits. The plaintiffs are proceeding under Section 1201(a)(2) of the Copyright Act. In relevant part, it prohibits any person from offering to the public or providing any technology, product, service, device, or component "that is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work protected under" the Act, or that "has only limited commercially significant purpose or use other than to circumvent a technological measure that effectively controls access to a work protected under" the Act.

"To circumvent a technological measure" is defined in the statute to mean descrambling a scrambled work, decrypting an encrypted work, "or otherwise to avoid, bypass, remove, deactivate, or impair a technological measure, without the authority of the copyright owner."

"A technological measure effectively controls access to a work," according to the definition in the Act, "if the measure, in the ordinary course of its operation, requires the application of information, or a process or a treatment, with the authority of the copyright owner, to gain access to the work."

There is, in my view, not the slightest question that plaintiffs have an exceptionally high likelihood of prevailing on the merits of the claim of violation of this Act by these defendants unless one of the statutory exceptions, which I will come to in a moment, is satisfied, or there is a constitutional impediment to that conclusion. CSS effectively controls access to the copyrighted works because, as the defendants conceded at pageof their memorandum, one cannot, in the ordinary course, gain access to the copyrighted works on DVDs without applying information or a process inherent in the player key that permits the play back of the DVD. Indeed, it appears also that one cannot copy the copyrighted works protected by CSS even with a player key.

It is undisputed that DeCSS decrypts encrypted works and otherwise avoids or bypasses CSS without the authority of the copyright owners. It is also clear to me that plaintiffs are likely to establish that DeCSS is primarily designed or produced for the purpose of circumventing CSS and, thus, falls within Section 1201(a)(2)(A), and also that it has only limited commercially significant purpose or use other than to circumvent CSS and, thus, falls within 1201(a)(2)(B).

The defendants made the argument here this afternoon that DeCSS was not primarily designed to circumvent CSS because it was meant only to enable people in lawful possession of copyrighted disks to play them for their own use on Linux machines. A Linux machine is a computer that is operating under the Linux operating system rather than under Windows, the much more widely disseminated operating system. On the relative positions of the two, anyone interested might read the decision in the Microsoft case. But the simple fact of it is that the argument fails for two reasons.

First of all, defendants have submitted no evidence whatsoever that the primary purpose of DeCSS was to enable people in lawful possession of copyrighted DVDs to play them on Linux machines and not to copy them. Secondly, even if there were proof to that effect, there is no doubt that DeCSS was primarily designed or produced for the purpose prohibited in 1201(a)(2)(A) because the definition of "circumvent a technological measure" in 1201(a)(3) makes clear that decrypting or descrambling a copyrighted work without the authority of the copyright owner is the very definition of circumventing a technological measure. Therefore, even if the primary purpose here were to enable lawful possessors of copyrighted DVDs simply to play those DVDs on Linux machines, the primary purpose would have been within the statute. I need not ultimately decide the case on that ground because there are ample alternative bases that I already have outlined.

In summary, on that point, absent a statutory exception or a constitutional impediment, there is here a crystal clear violation of the statute.

The defendants have argued almost every conceivable exception found either in 1201 or in other parts of the Copyright Act, and they are all arguments that I find unpersuasive. We start with Section 512© of the Copyright Act which provides limited protection from liability for copyright infringement by certain service providers for information resident on a system or network owned or controlled by them. I think that argument is made under 512(c) only with respect to Mr. Kazan. But it does not matter because the grounds that require its rejection in his case require its rejection in the case of all of them.

First of all, there is no proof before the Court that any of the defendants is a service provider within the meaning of 512(c). Second, even if they were all service providers, what 512(c) does is to provide liability protection from copyright infringement. These defendants are sued under 1201(a)(2) and are sought to be held liable not for copyright infringement but for a separate statutory violation. Section 512(c), whether or not they are service providers, is simply of no applicability to this case.

The next argument turns on the reverse engineering exception, Section 1201(f)(2), or, more broadly, 1201(f). 1201(f)(2) provides that, notwithstanding Section 1201(a)(2), a person who has lawfully obtained the right to use a copy of a computer program may develop technological means to circumvent a technological measure, or the protection afforded by that measure, to identify and analyze the elements of the program, that is to say, the program which the individual in question has obtained the right to use, necessary to achieve interoperability with an independently created computer program, or for the purpose of enabling interoperability if those means are necessary to achieve interoperability but only to the extent that doing so does not infringe copyright. 1201(a)(3) permits limited rights to make such information available.

The defendants argue that they fall within this exception because DeCSS is necessary to achieve inoperability between computers running on the Linux system rather than Windows and DVDs. I reject the argument. First, there isn’t any evidence in the record to support the assertion. Second, DeCSS concededly runs under Windows, even assuming it runs under Linux. And, third, as the plaintiffs have pointed out, the legislative history makes abundantly clear that Section 1201(f) permits reverse engineering only of computer programs. It does not authorize the circumvention of technological protection that controls access to other works such as movies.

The next exemption or exception on which the defendants rely is Section 1201(g), which relates to encryption research. There is no showing that the defendants are engaged in that research, but I need not rely on that point. In order to avail oneself of the exemption under 1201(g), the defendant must demonstrate that he made a good faith effort to obtain authorization before circumventing the technological means. There is no such showing here.

The next argument is that this was authorized or exempt security testing under Section 1201(j). That exemption is limited to the good faith testing of computers, computer systems, or computer networks, with the authorization of the owner of the equipment or the network. In this case, DeCSS has nothing to do with testing computers, computer systems, or networks, and what is going on here certainly was not done with the authorization of the owners.

We next have the argument that the defendants are engaged in a fair use under Section 107 of the Copyright Act. Section 107 of the Copyright Act affords a limited defense to liability for copyright infringement. For the same reasons that I pointed out earlier—these defendants are not being sued for copyright infringement—the fair use defense has no application in the facts of this case. Thus, no colorable defense under the Copyright Act has been advanced.

The defendants next argue that the First Amendment protects their activities. They argue that their dissemination of DeCSS is protected by the First Amendment and that, moreover, injunctive relief here would run afoul of the prior restraint doctrine.

I have some question in my mind whether DeCSS, the only portion of which that is offensive to the plaintiffs consists of executable instructions as distinguished from nonexecutable programmer comments, is protected speech under the First Amendment. But for the purposes of this decision, I assume that it is. To say that it is, however, is only the beginning of the analysis.

Professor Nimmer, in his famous treatise on copyright, points out that if one took the most extreme absolutist First Amendment and statutory construction approach to the provisions of the Constitution relevant here, the law of copyright is unconstitutional in its entirety. The reasoning would be that all expressions are speech.

The First Amendment says Congress shall make no law abridging freedom of speech or of the press. The First Amendment was adopted after Article I of the Constitution. Under normal precepts of statutory construction, a later amendment modifies an earlier text. All copyright law impinges on freedom of expression because any time one plagiarizes a book or a play or a movie or a copyrighted newspaper article, one is, after all, speaking and expressing oneself and, therefore, it would follow that the law of copyright is unconstitutional and that no copyright protection would exist for anyone in anything.

I hasten to add that Professor Nimmer does not take the view that the law of copyright on which he and his son have both spent their lives is unconstitutional. I am not sure that the Supreme Court has ever directly addressed that precise argument, but the question was raised indirectly in the Gerald Ford memoirs case, Harper & Row v. Nation Enterprises, 471 U.S. 539, where the alleged infringer was charged with copyright infringement for printing the juiciest part of President Ford’s copyrighted memoirs, allegedly in violation of the publisher’s copyright. The defense was, among other things, fair use, and the argument was made that the fair use defense in that case had to be given a very expansive reading to take account of the First Amendment interest in President Ford’s memoirs, particularly, as I recall, his account of how President Nixon came to be pardoned for Watergate.

The Supreme Court made clear that conventional fair use analysis would be applied and that it would not expand the boundaries of the traditional fair use defense in light of the First Amendment argument advanced by the defendant. In the course of doing so, it made it perfectly clear that copyright and the First Amendment coexist.

That is not to say there is never any tension. And it is not to say that there is any crystal clear reconciliation of whatever tension there is. There are a number of possible approaches.

One that strikes me as quite relevant here, particularly in light of the Betamax case, which I will come to in a minute, is this: The copyright clause of the Constitution, Article I, Section 8, empowers Congress to secure, for limited times, to authors the exclusive right to their writings. It, thus, empowers Congress to adopt the Copyright Act and to confer upon the owners of copyrights the exclusive right to exploit those works for a limited period. Article I concludes by empowering Congress to make all laws which shall be necessary and proper for carrying into execution the foregoing powers. In order to give authors the exclusive right to exploit their copyrighted writings—and I should make clear that the word "writings" in this context is a generic term that embraces all copyrighted works—Congress necessarily was given the power to prevent others from publishing those writings as long as the copyright subsisted, even though doing so necessarily prevents some people from saying some things some of the time; namely, things that are copyrighted by others.

In consequence, the First Amendment cannot be read as abrogating the copyright clause and the necessary and proper clause. Congress quite plainly has the power to limit speech where doing so is appropriate to ensure that copyright owners enjoy the exclusive right to exploit their works. Chief Justice Marshall, almost 200 years ago, said with respect to the necessary and proper clause "let the end be legitimate, let it be within the scope of the Constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited but consistent with the letter and spirit of the Constitution, are constitutional." McCulloch v. Maryland, 4 Wheaton 316, 420, decided in 1819. That is the law today.

The Betamax case makes especially clear that in areas of rapid technological change, such as the one we are dealing with, the judiciary is to give deference to Congress’ judgment about the manner in which copyright is to be protected in a changing technological climate. In that case, Sony Corp. v. Universal City Studios, 464 U.S. 417 decided in 1984, a case that had to do with videotape recorders, the Supreme Court said this, and I do elide some material in this quote for brevity:

From its beginning, the law of copyright has developed in response to significant changes in technology. Indeed, it was the invention of a new form of copying equipment—the printing press—that gave rise to the original need for copyright protection. Repeatedly, as new developments have occurred in this country, it has been the Congress that has fashioned the new rules that new technology made necessary. The judiciary’s reluctance to expand the protections afforded by the copyright without explicit legislative guidance is a recurring theme. Sound policy, as well as history, supports our consistent deference to Congress when major technological innovations alter the market for copyrighted materials. Congress has the constitutional authority and the institutional ability to accommodate fully the varied permutations of competing interests that are inevitably implicated by such new technology.

That appears at pages 430 and 431 of 464 of the U.S. Reporter. Now, in that case, the court relied on this traditional deference to Congress to conclude that, in the absence of legislation, it should not extend copyright protection. But the very same reasoning counsels in this case that in the face of express guidance from Congress, unmistakably clear guidance from Congress, I ought to be exceptionally reluctant to cut back on it. That is not to say that the courts are obliged to blind themselves to constitutional violations. Quite the contrary. But this is a circumstance in which there is an obvious need for accommodation between interests in free speech and interests in protection of copyright.

As Congress has chosen a means which is directly related to the protection of important copyright interests, I see no infirmity viewing this from the perspective of the Constitution as a whole, that is, the First Amendment, the copyright laws, and the necessary and proper clause. That is one possible approach to the First Amendment question in this case.

Another is a balancing approach in which there would be a balancing between the limitation on expression inherent in protecting a copyright and the values served by protecting the copyright. In this case, I have no doubt about where that balance falls either, assuming that were the appropriate test. The plaintiffs here have enormous investments in copyrighted material, the commercial significance of which is a matter of broad and obvious public knowledge. The creation of media content is one of the large industries in this country and one of our major exports today. The protection of intellectual property rights in materials owned by Americans is an important feature of our foreign policy and our trade policy. You only have to read the newspapers to know that.

On the other side here, we have the interest in expression. I do not for a moment demean that interest; it is an important one. But we always have to ask ourselves what we are really talking about. The facts say a lot. Putting aside programmer comments, nonexecutable programmer comments, which are not the focus of this application, we are dealing with a set or sets of computer instructions. They are, I am prepared to assume, expressive to some degree. They are much closer to an electronic or a mechanical device for performing an operation on a subject to produce a result. They are a set of instructions which cause a computer to render intelligible a data file on a DVD. If I were to balance the interest in protection of copyrights against the extent to which free dissemination of that set of machine-executable instructions serves the goals traditionally served by protection of speech—an informed society, the ability to engage in self-government, the ability to realize social and intellectual goals—the balance in my judgment falls on the side of copyright protection, even though I recognize that there is perhaps some interest served on the defendants’ side of the ledger.

I do not think I need, for present purposes, to come to a definitive theoretical view on this point. Under any of the approaches that have been brought to my attention, or that I have found on my own, I find the legislation under which plaintiffs seek relief, both on its face and as applied here, constitutional or at least highly likely ultimately to be held constitutional.

The final point that plaintiffs make is the argument that an injunction here would be an unlawful prior restraint. It is an argument that is invoked almost as a talisman on the assumption that any and all prior restraints are unconstitutional, short of an immediate and grave threat to national security or something approaching that. I suppose, for popular and even first-year law school purposes, that is not a bad statement. But it is not really entirely accurate.

I took a look during our break at Tribe on Constitutional Law, certainly somebody who has had a few more First Amendment cases than I have, and he makes the point that if you look at what the Supreme Court and the federal courts have done rather than some of the rhetoric, the reality is sometimes hard to square with the rhetoric. He says, and I quote from the second edition of his book, at page 1046, "but prior restraints have been approved in the seemingly less momentous areas of film censorship, commercial advertising, and permit requirements to use public places for expressive activities. The relative importance of the government’s interests, therefore, cannot explain the cases." He then goes on to try to come to a doctrinally satisfying reconciliation, which I will not bore you with.

He does point out, however, that in the Progressive magazine case, United States v. Progressive, Inc., 467 F.Supp. 990, where a magazine attempted to publish an article on how to make a hydrogen bomb, the district court did issue a preliminary injunction. It remained in effect for seven months, and the Supreme Court denied a motion to expedite the appeal. It illustrates the point about the difference between the rhetoric and the reality.

Bearing in mind the very weighty interests on the plaintiffs’ side of the equation here and the, to me, quite limited, although probably not nonexistent, expressive interests in the machine-executable code, and the lack of time sensitivity of the latter, I conclude that a preliminary injunction in this case is consistent with the prior restraint doctrine and, therefore, the motion is granted. A preliminary injunction will issue.

I do bear in mind the defendants’ interest in speed here and in avoiding a prolonged duration for the preliminary injunction, and so, within the limits of my schedule, which is pretty clear at the moment, you can have a trial pretty near whenever you want.

So when do you want your trial? I think I’m free to start Tuesday.

MR. LEVY: Your Honor, I’m having the problem with being in California. I cannot even speak with the clients to find out what their schedule is like. Certainly I’m not available for trial on Tuesday. I’m not sure as to the other attorneys.

THE COURT: Then let’s leave it this way. I will act promptly on any application by the plaintiffs to set this case for a trial just as fast as I can reach it. And all you have to do is communicate with my chambers and you’ll be on the fastest express train you ever saw because I take this seriously. And you will get as prompt a trial as I can give you, and I think that’s very prompt.

MR. LEVY: Thank you, your Honor.

MR. KATZ: Your Honor, you mentioned the application of the plaintiff. Are you referring—

THE COURT: I misspoke. Application of the defendants.

MR. KATZ: Thank you, your Honor.

THE COURT: I misspoke. I always assume when I see the Proskauer firm that it’s here on behalf of some employer being sued for some labor violation. So they’re always here for defendants.

I have taken the order to show cause and translated it into a preliminary injunction. I have copies that you folks can take a look at. And if there are any problems about the form of it, I’ll hear them now. I realize you folks are in California and have a problem with that, but, Mr. Katz will hold up your end.

MR. KATZ: Your Honor, I’ve completed my reading of the document.

THE COURT: Okay. Do we have any issues about the form?

MR. GOLD: Your Honor, we got a little smarter in the extra time between the end of last week and the end of this and were hoping that we could get an injunction against linking to DeCSS or posting or linking to any other circumvention device. Again, the posting is you stay on this one website and you take down DeCSS. The link is that you click your mouse twice, you get to another website, which has DeCSS on the page you’re transferred to, and you get it. So the only difference is instead of clicking twice, you have to click twice, wait a second, and click twice again. And that’s the linking to another circumvention device. One of the defendants is engaged in both.

MR. KATZ: Your Honor, if I may be heard on that, the danger in doing so is linking to sites—let me restate that, not knowing what’s on the other end of a website. If you have a link that goes to a website and you’re not necessarily posting that site and you double click, you are at the mercy of whatever may be on the other side of that.

THE COURT: Suppose it were "knowingly linking."

MR. BAUMGARTEN: Your Honor, our application does not refer to linking to the site. It refers to linking to circumvention devices. We’re aware of the concern.

THE COURT: What about that?

MR. KATZ: Your Honor, my concern is, one, for all sites, but I’m concerned primarily about the media aspects of this in that there may be reporting of the DeCSS, which certainly would be permitted under your ruling, but—

THE COURT: Don’t let my silence reflect acquiescence. I’m not quite sure what you mean, but I’ll hear you out.

MR. KATZ: Thank you. In that there may be a reference to a particular site that may or may not have the DeCSS on it. If there is a direct link coming from the site, I think that needs to be distinguished from the actual posting of DeCSS.

MR. LEVY: Additionally, your Honor, I think that the linking issue involves a completely separate issue, a whole slew of other problems, and there’s been no notice to the defendants that this was what was going to be discussed. It’s completely separate. Simply drawing a quick suggestion, it would mean, as discussed in argument, that one cannot link to the San Pedro Mercury News because it does have a link to DeCSS.

MS. GROSS: Additionally, I think it’s important to note that, once you link to something, you have no control over what that person puts in that file.

THE COURT: That’s already been covered, Ms. Gross.

Mr. Baumgarten.

MR. BAUMGARTEN: Your Honor, I simply want to point out that the language in the statute and the language in the order you prepared covers "providing," and Mr. Gold pointed out it’s just four clicks instead of two and you’re still getting the material. This is not the copyright issue of whether linking is a performance or a display. This is the language of this statute.

THE COURT: If I understand what you’re saying, at least one of the defendants has on his site a place where you double click on an icon or a hypertext link and that does not of itself download the DeCSS to your computer; what it does is it puts you onto another site.

MR. BAUMGARTEN: For that material.

THE COURT: Where you then have to double click again.

MR. BAUMGARTEN: Yes, your Honor.

MR. GOLD: Yes, it’s a page with—

MR. BAUMGARTEN: But on that page, you don’t have the page for the other site and scroll through. Our order is limited to going directly to the offensive material. To us, it makes little difference whether you’re providing it with the first set of clicks or the second. You’re still providing it and the language of the statute is "providing."

MR. LEVY: Your Honor, providing a whole host of other information on the site.

THE COURT: Mr. Levy, just hold on a minute. Is this hypothetical link page one on which, in your contemplation, the user simply double clicks anywhere on the page and automatically does it download, or is it a link page on which there’s a bunch of stuff and if you click on the right hypertext link on that page you get the download because they’re offering the download to everybody?

MR. BAUMGARTEN: Your Honor, for the purposes of the preliminary injunction, I think we’d be satisfied to make it clear that you’re clicking on the icon or whatever is there or the word "DeCSS," as long as what you’re downloading to the second click is DeCSS. Anything else on the page is not within our contemplation. We view it essentially the same as posting the DeCSS. We don’t mean to expand it. If there was a newspaper article on the link to site the order would not enjoin linking to the newspaper article.

THE COURT: I think that that issue is sufficiently different from what I’ve heard that I’m not prepared to rule on it now. I will deal with this in the form, if you wish to press it, of an application to modify and we’ll give the defendants an opportunity to respond to it and we’ll deal with it in a more measured way.

MR. BAUMGARTEN: Thank you, your Honor.

MR. KATZ: Your Honor, with respect to that, however, by looking at the preliminary injunction order, 2(b), as your Honor points out, we deal with the issue of posting, but I’m concerned about the language "or in any other way manufacturing importing, or offering to the public," and it’s the "importing," Judge, I’m concerned about in the language of what a link is.

THE COURT: That’s the statutory language.

MR. KATZ: I understand that, your Honor. But it just runs counter to what counsel has just said in terms of what they’re willing to accept, posting versus linking.

THE COURT: Look, I don’t see the problem about importing. And I do not now offer any view as to what the phrase "offering to the public" means, or what the word "providing" means. I’m not going to give an advisory opinion on that. This is the statutory language. Your people at the moment obviously are offering to the public and providing. If some close case gets presented later on, I’ll deal with it.

MR. BAUMGARTEN: Thank you.

THE COURT: Anything else about the form of the order?

MR. GOLD: No, your Honor.

MR. KATZ: No, your Honor.

THE COURT: All right. The order is signed at 5:40 p.m. My law clerks will give each side one copy of it and we will docket the order. I reserve the right just to edit for syntax this transcript. It probably won’t be available to you until Monday, at best, before trial.

MR. KATZ: Your Honor, if I may just point out for clarification, affidavits or declarations of the defendants had been submitted to your Honor.

THE COURT: Where?

MR. KATZ: In the form of, if I’m not mistaken, in the reply brief. They had been sent over to counsel, and those are contained—

THE COURT: The reply brief was filed by the plaintiffs.

MR. KATZ: By the plaintiff. I apologize, your  Honor.

THE COURT: Yes. You didn’t submit any.

MR. KATZ: I had been unable to obtain them and bring them down to court in time, and I sent them over to counsel and I believe that they are included—I believe that they are included.

THE COURT: They’re included where?

MR. KATZ: I believe I saw them in the facsimile that was sent over, the three affidavits.

THE COURT: Who are the affiants?

MR. KATZ: Roman Kazan—

MR. KAZAN: I have a copy of it.

MR. KATZ: -- Eric Corley and Shawn Reimerdes.

THE COURT: They were never sent to me, as far as I know. They were not filed with the Court, were they?

MR. KATZ: No, your Honor. We only received them this morning.

THE COURT: The deadline was a day or two ago anyway.

MR. KATZ: I understand that.

MR. HART: Your Honor, I called Mr. Katz to ask him about it, and by the time he tracked down the fax that was supposed to have gotten to our office, we had already replied blindly and without the sworn testimony. I did indeed get a fax from him after that and brought it on my way to court. But Mr. Gold has not even had a chance to see it.

MR. KATZ: And, your Honor, that was based on the transmission I had received from the individual defendants.

THE COURT: Look, obviously it’s unfortunate that that happened. But, counsel, you all knew what the rules were. And there’s nothing unusual about a preliminary injunction being heard this way. It happens every day of the week. And it’s been going on the entire 30 years I’ve been in this business in New York and it’s probably going to go on a lot longer after I’m gone. I mean an affidavit is good only if you put it before the Court.

MR. KATZ: Understood, your Honor.

THE COURT: Anything else?

MR. GOLD: No, your Honor.

THE COURT: I thank counsel. This was illuminating to say the least.