Published Monday, January 10, 2000, in the San Jose Mercury News

DVD suit detours new legal ground

BY HOWARD MINTZ
Mercury News Staff Writer

When the entertainment industry rushed to court two weeks ago to shut down Web sites that were distributing software allowing people to copy DVDs, its lawyers could have pulled out a lot of legal stops to ensure the case broke new ground in cyberlaw.

But as it turns out, the DVD Copy Control Association kept it simple. Whether by design or strategic blunder, the trade group's lawsuit is so narrow in its approach that it may sidestep what Internet watchers hoped would be a precedent-setting showdown over free speech rights in cyberspace.

As often happens in heated court fights, the presiding judge in the DVD case may not have to deal with some of the larger constitutional and legal principles at stake, according to legal experts, who for the most part are puzzled by the industry's tactics. This may include the unresolved question of whether the courts can restrict the hyperlinking of information on the Web that may be protected secrets.

``It's going to be easy for the courts to dodge the issues here,'' said Palo Alto attorney Mark Radcliffe, an expert on high-tech law who is following the case.

The DVD makers and Internet activists return to Santa Clara County Superior Court Friday for the next round in their legal battle. The DVD industry claimed in its Dec. 28 lawsuit that Web sites have pirated proprietary technology designed to copy DVD movies and illegally distributed the software around the Internet.

Web site operators sued by the industry, many of them Linux enthusiasts, say such an injunction would trample First Amendment rights and impede the exchange and development of new technologies. They are backed by the Electronic Frontier Foundation, which insists that the DVD association's position threatens to stifle the flow of information on the Internet.

Protecting trade secrets

But instead of watershed free speech questions, the case may turn on one of the most common legal disputes in Silicon Valley today -- how far a company can go to hold onto its trade secrets when technology can be transmitted around the world in a mouse click.

Eventually, it may be up to the California Supreme Court -- or perhaps the federal courts -- to decide whether the DVD case is the right forum for making new law in cyberspace.

``We're not trying to break any new ground,'' said New York attorney Jeffrey Kessler, who represents the Morgan Hill-based DVD association. ``This case is about protecting trade secrets. We have been getting back all these hypotheticals of situations we're not suing over.''

The DVD industry will ask Superior Court Judge William Elfving to issue a preliminary injunction that would keep dozens of Web sites from distributing the software, which apparently allows consumers to copy DVD movies by defeating a copy protection system encrypted in the DVDs.

Elfving two weeks ago refused to issue a temporary restraining order against the sites. To get a preliminary injunction, the industry will now have to demonstrate a likelihood that it will prevail on its claim that the Web sites are knowingly disseminating protected trade secrets. Legal experts say the claim in the end may rest more on facts than the law.

The DVD Association is attacking Web sites that post the software as well as sites that provide links to the decoding scheme, and insists an injunction is necessary to prevent the illegal copying of DVDs.

In many respects, the complaint is an attempt to stop alleged copyright piracy without using copyright laws. It relies solely on California trade secrets laws. Perhaps most important, it does not invoke the Digital Millennium Copyright Act of 1998, a new federal law backed by companies worried about the very conduct at issue in the DVD case.

``I thought that was explicitly what they wanted covered by (the copyright act) and what the whole thing was about,'' said Carey Heckman, a professor at Stanford's Law and Technology Policy Center. ``I thought it was made to order for them.''

Using copyright laws

Legal experts say the advantage of using copyright laws is that it would help the industry show that Web site operators contributed to copyright infringement by posting the protected DVD technology. Last month a federal judge in Utah shut down sites that were linking copyrighted documents owned by the Mormon Church, one of the few similar cases yet to be ruled upon by the courts.

The Church of Scientology also has aggressively -- and often successfully -- used copyright laws to block former members from posting the church's secret writings on the Internet.

The Electronic Frontier Foundation assumed last year that it would be fighting the DVD industry under the new federal copyright law, which it considers too broad and an undue burden on free speech rights on the Internet. But the industry did not go that route.

``We were figuring on becoming involved in this case, but were anticipating that it would be under the (digital copyright act),'' said EFF attorney Robin Gross. ``When it was for trade secrets (theft), it was a big surprise to us.''

Added Eben Moglen, a Columbia University law professor who is advising EFF, ``I think they wish to avoid litigating the DMCA question right now. They wanted the maximum bang for the minimum buck -- if they can get a California state court judgment, they can race from court to court to enforce it.''

Kressler, the DVD industry's lawyer, will not discuss why the suit did not attack the Web sites under the new copyright law. ``I wouldn't rule out the possibility there are other causes of action, but obviously we felt the trade secrets action is for us a very strong one,'' he said.

To Kressler, the case boils down to a simple analogy: If someone steals the formula to Coca Cola, and three other people get the formula and post it on the Internet, they can be shut down through an injunction for knowingly disseminating a trade secret. He maintains the Web site operators knew -- or ``should have known'' -- they were posting protected DVD technology.

``You can't say, `I put it on the Web, it's now speech,' '' Kessler said.

But civil liberties groups say the dispute is not that simple, particularly once information has been scattered on the Internet. They deny that the Web site operators have any interest in pirating DVDs, and in fact have engaged in legitimate reverse engineering so they can make DVDs compatible with the Linux, the open-source operating system.

The Web operators have some strong legal precedent on their side. The courts have been extremely reluctant to let companies use trade secrets laws to stop the development of new ideas from existing technologies through reverse engineering.

One major precedent involves an 18-year-old federal appeals court ruling that rejected a lock company's attempt to stop a group of locksmiths from publishing a method for picking its locks. More recently, the 9th Circuit U.S. Court of Appeals in San Francisco, which interprets law for nine western states, found that Sega Inc. could not prevent a competitor from dissecting its computer program to produce its own brand of Sega compatible video game equipment.

Finally, the 9th Circuit also has recently ruled that encryption technology is a form of speech and can thus be protected by the First Amendment; that case involves a challenge to the Clinton administration's ban on the export of encryption programs on the Internet.

Civil liberties lawyers say that case should make it more difficult for a judge to restrict links to such information. ``The analysis is exactly the same,'' said San Mateo attorney Cindy Cohn, who is challenging the government's encryption policy.

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