Assn. drops unscrambling case

WASHINGTON — The DVD Copy Control Assn. (DVD-CCA), the licensing agency for the CSS encryption system used on DVDs, has dropped its 4-year-old trade secrets lawsuit against a California man who posted the decryption program DeCSS on his Web site.

The decision to drop the case closes one front in the studios’ multipronged legal strategy to try to contain the spread of software that unscrambles DVDs and allows users to make copies.

Although the studios have also sued DeCSS publishers for copyright infringement under the federal Digital Millennium Copyright Act, DVD-CCA had hoped to use California’s strict trade secret laws to police the spread of decryption software from the presumably friendlier confines of California state courts.

Those efforts suffered a setback in 2002, when the California Supreme Court ruled that out-of-state residents who posted DeCSS could not be sued in California.

Things went better for the studios last August, however, when the same court upheld a preliminary injunction against California resident Andrew Bunner barring him from posting the program on his Web site.

That case had been sent back to the California Court of Appeal for further proceedings, where it was pending until DVD-CCA’s sudden motion to drop the lawsuit was filed Thursday.

In a statement, DVD-CCA said the decision was part of an “evolving” legal strategy.

“The trade secrets case together with the DMCA-based litigation set important precedents and sent important messages,” said DVD-CCA lead attorney Robert Sugarman of Weil, Gotshal & Manges. “The owners of trade secrets will not stand by and allow their property to be misappropriated without action, and the rulings of the courts have shown protection of intellectual property is an important priority of the legal system.”

Sugarman pointed to the California Supreme Court’s ruling on the preliminary injunction, which rejected Bunner’s claim that posting DeCSS prior to trial was protected by the First Amendment, as a significant victory.

The motion to drop the case surprised defense attorneys.

“We certainly weren’t expecting it,” said Cindy Cohn, legal director for the Electronic Frontier Foundation, which was funding Bunner’s defense. “But we’re please that the DVD-CCA has finally stopped attempting to deny the obvious — that DeCSS is not a secret.”

Despite the Supreme Court’s ruling on the injunction, Cohn said the defense was confident of its position before the Court of Appeal, which had earlier ruled in favor of Bunner on his First Amendment claims.

“We had just finished briefing the Court of Appeal, and the court had said it would not hear oral arguments but would simply rule in the case,” Cohn said. “For them to drop at it this point suggests they were concerned about how the court might rule and they wanted to avoid a bad precedent.”

DVD-CCA may not have abandoned the courtroom altogether, however.

“The dismissal is only the first step in the evolved strategy, which is being updated to reflect current factors in the rapidly changing marketplace,” the group said in its statement. “DVD-CCA is also considering taking action to enforce patents on its technology in order to protect its CSS copy protection system from unauthorized use.”

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