Court rejects Web site right to reveal secrets

WASHINGTON — The California Supreme Court handed Hollywood Studios a major victory Monday as it overturned a lower court ruling and declared the First Amendment does not allow a publisher to disseminate private trade secrets.

Ruling in the case of DVD Copy Control Assn. v. Andrew Bunner, the seven-judge panel was unanimous in concluding that the First Amendment does not shield a Web site publisher against charges that it violated the association’s trade secrets by posting DeCSS, a program that unlocks the CSS encryption codes used to control access to DVDs.

Ruling overturns a lower court decision declaring that DeCSS is a form of “pure speech” and that banning it represented the sort of “prior restraint” on speech prohibited by the First Amendment.

Previous setback

Earlier ruling, issued last year by the California Court of Appeal, was viewed as a setback to the studios, which hope to use California’s strict trade secret laws to protect new encryption systems being developed for emerging high-definition video formats.

In its ruling Monday, the state Supreme Court agreed that computer code is “speech,” and protectable in principle, but ruled that state courts could still apply trade secret laws to bar publication so long as those laws are aimed primarily at protecting intellectual property rather than prohibiting speech based on its content.

“The First Amendment does not prohibit courts from incidentally enjoining speech in order to protect a legitimate property right,” the Supreme Court said in an opinion signed by five of the seven justices. “(Bunner) did not post (DeCSS) to comment on any public issue or to participate in any public debate. Indeed, only computer encryption enthusiasts are likely to have an interest in the expressive content — rather than the uses — of DVD-CCA’s trade secrets.”

Suits earlier

The case dates to 1999, when DVD-CCA sued hundreds of Web site operators who had posted DeCSS. The trial court issued a preliminary injunction against the defendants, ordering them to remove DeCSS from their sites.

Although most complied, Bunner appealed the injunction, arguing that DeCSS was no longer a secret and that, at any rate, publication was protected by the First Amendment.

In its ruling last year, the Court of Appeal did not address the question of whether DeCSS qualified as a trade secret but agreed with Bunner’s First Amendment claims.

Meanwhile, the studios and the MPAA separately pursued copyright claims — a different legal issue –against DeCSS posters.

Monday’s ruling was not a complete victory for the studios, however.

While rejecting Bunner’s First Amendment claims, the Supreme Court sent the case back to the Court of Appeal with specific instructions to re-examine the question of whether DeCSS was still a legitimate secret at the time Bunner published it.

If the lower court finds that it was not, it could still vacate the injunction against publication on those grounds.

Widely viewed

Lawyers for Bunner have argued that DeCSS was so widely distributed on the Internet that it no longer contained any trade secrets.

“The appeals court can now examine the movie industry’s fiction that DeCSS is still a secret and that a publication ban is necessary to keep the information secret,” said Cindy Cohen, legal director of the Electronic Frontier Foundation, which supported Bunner’s defense. “DeCSS is obviously not a trade secret since it’s available on thousands of Web sites, T-shirts, neckties and other media worldwide.”

Trade secret law also requires that Bunner had to know, or should have known, that the trade secrets contained in DeCSS were acquired by improper means in order to be liable.

DeCSS was created by Norwegian teenager Jon Johanson by reverse-engineering CSS.

U.S. courts have split on the question of whether reverse-engineering is permissible.

Reps upbeat

DVD-CCA reps were still enthusiastic about Monday’s ruling.

“The question of whether the injunction was properly issued under trade secret law won’t do anything to the First Amendment question. They’re totally separate issues,” said DVD-CCA lead attorney Robert Sugarman, of Weil, Gotshal and Manges. “The precedential value of this decision is that, contrary to what the Court of Appeal held, an injunction against the publication of trade secrets is not prohibited by the First Amendment.”

Sugarman added, “When we go back to the Court of Appeal to actually litigate the (trade secret) issue, we believe that we will be able to establish that the trial court acted properly and had sufficient evidence to issue injunction.”

(Paul Sweeting is a reporter for Daily Variety sister publication Video Business.)

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