Volume I

Issue : 5: September 4, 2003

• U.S. Court of Appeals (9th Cir.) Asserts Jurisdiction over Online Retailer
• Court Limits Extraterritoriality of the U.S. Copyright Act
• Amazon.com Launches Lawsuits in U.S. and Canada to Stop Spoofing
• Property and Trade Secret Rights Outrank Free Speech Rights in DVD Copying Code Case
• Parties To Litigation Do Not Hold Copyrights Over Examination for Discovery Transcripts
• U.S. Court of Appeals Upholds Statutory Damages for Domain Registered Prior to the Enactment of ACPA
• Major U.S. ISP EarthLink Sues John Doe Spammers in B .C. and Alabama
• Defence of Misuse Extended to Suppression of Criticism in Copyright
• Online Broadcasters Sue Recording Industry (RIAA)
• Sixth Circuit Court Strikes Down Michigan Wine Law as Unconstitutional
• Saskatchewan Court of Appeal Upholds Criminal Conviction For Online Marketing Scheme
• U.S. First - North Dakota Prosecutes a Man for Gambling on the Internet
• U.S. Appeals Court (9th Cir.) Rules Massively Overbroad Subpoena For E-Mails Led to Privacy Violation

Home > Volume I > Issue 5: September 4, 2003 > Property and Trade Secret Rights Outrank Free Speech Rights in DVD Copying Code Case

Property and Trade Secret Rights Outrank Free Speech Rights in DVD Copying Code Case

On August 25, 2003, the California Supreme Court ruled that software developer and Web publisher Andrew Bunner could be prohibited from posting online code for decrypting DVDs without violating the U.S. Constitution and the California Constitution: "By prohibiting Bunner from exploiting and destroying [the plaintiffs'] trade secrets because of his actual or constructive knowledge of its illegal acquisition, the preliminary injunction merely applies this venerable standard of commercial ethics to a constitutionally recognized property interest in information."

Originally filed in 1999, the long running case has attracted the interest of the online community both those who see the Internet as a free haven to distribute software, whether legally acquired or not, and those entities, mainly corporations, that wish to control such distribution.

Bunner allegedly posted trade secrets owned by DVD Copy Control Association, Inc. ("DVD CCA"), an industry alliance, on his Internet website despite knowing or having reason to know that the secrets were acquired by improper means. DVD CCA pursued Bunner, among others, in California State court, on the basis of trade secret violation, seeking only injunctive relief. The trial court eventually granted a restraining order but the Court of Appeal overturned the ruling, concluding that the decision violated Bunner's First Amendment rights.

Bunner acquired code ("DeCSS") for coping DVDs that was first derived by a Norwegian resident by reverse engineering licensed software. That licensed software was distributed with a license that expressly prohibited reverse engineering. Bunner claimed he posted the code on his Web site to allow 'Linux' users to use and enjoy DVDs and to give programmers access to the code to fix bugs and make improvements.

The Supreme Court of California reviewed the Court of Appeal's ruling on the point of constitutionality, that the factual assertions supporting the original injunction were true. Importantly, the case was remanded to the Court of Appeal for a review of the record to confirm those supporting facts. For example, the Court of Appeal is directed to consider whether DVD CCA's technology is part of the public domain and no longer a trade secret and whether the trade secret was acquired by improper means when the licensed software was reverse engineered. While the decision brings clarity to the constitutional (U.S.) balance between free speech rights and property rights, allowing software companies to protect their IP using trade secrets, it leaves open the question whether a trade secret that is widely available on the Web remains a trade secret.

For a copy of the California Supreme Court decision click:

www.courtinfo.ca.gov/opinions/documents/S102588.DOC