1 UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
2 ------------------------------x

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

8 Plaintiffs,

9 v. 00 CV 277 (LAK)

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

12 Defendants.

13 ------------------------------x

14 January 20, 2000
2:45 p.m.
15
Before:
16
HON. LEWIS A. KAPLAN,
17
District Judge
18
APPEARANCES
19
PROSKAUER ROSE LLP
20 Attorneys for Plaintiffs
BY: LEON P. GOLD
21 JON BAUMGARTEN
WILLIAM M. HART
22 KENNETH RUBENSTEIN

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


2



1 (In chambers)

2 THE COURT: All right. So one of the people on the

3 phone is Robin Gross and the other gentleman is --

4 MR. KATZ: Allonn Levy.

5 Judge, if I may, in the interim, these are two

6 applications pro hac vice for Ms. Gross and Mr. Levy.

7 Judge, I've lost them. I'll get Ms. Gross and tell her

8 we're ready to proceed.

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

10 MS. GROSS: Hello?

11 THE COURT: Ms. Gross, are you there?

12 MS. GROSS: Yes, I'm here.

13 THE COURT: Mr. Levy, are you there?

14 MR. LEVY: Allonn Levy here. Thank you.

15 THE COURT: Everyone is present. Let me first

16 indicate that this is being held in chambers rather than in

17 the courtroom to accommodate Ms. Gross and Mr. Levy, who are

18 in California and, for various reasons, were unable to get to

19 New York for the hearing this afternoon. And I have usable

20 conference facilities here, but not in the courtroom. The

21 proceeding is nonetheless public. There are various members

22 of the public and I believe the press in attendance, and they

23 are certainly welcome.

24 Mr. Katz has given me pro hac vice applications on behalf

25 of Ms. Gross and Mr. Levy. I will hear Ms. Gross or Mr. Levy



3



1 this afternoon. These applications are not in the right form

2 and they're not accompanied by the necessary check that the

3 clerk's office will insist on, so you should make those

4 applications and pay the fees in due course. But I'll hear

5 you this afternoon.

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

7 the errors.

8 THE COURT: No problem. All right. It's the

9 plaintiff's motion for a preliminary injunction. I'll hear

10 you, Mr. Gold, on behalf of the plaintiff.

11 MR. KATZ: Judge, if I may just have one housekeeping

12 matter before we begin. Your Honor had directed that reply

13 documents be served via fax by 12:30 today. It's my

14 understanding that counsel in California had not received it

15 when I had left my office.

16 Counsel, have you since received the documents.

17 MS. GROSS: I have not received the documents.

18 MR. LEVY: I have not, your Honor. However, I have

19 not been back at my office. I understand from Mr. Katz that

20 there were some 94 pages faxed, so I don't imagine that I

21 would have been able to review them in any case. But, no, I

22 did not have them.

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

24 MR. KATZ: Judge, I received 71 of the 94 pages. I

25 had to leave my office to get down to court on time. I



4



1 simply, even though they were faxed prior to, I believe the

2 fax started coming through about 11:30, it took well over an

3 hour for the transmission to complete and, as a result, Judge,

4 because I was travelling in a car, I did not have an

5 opportunity to review these documents, 94 pages. I simply

6 wasn't able to do so in the period of time in which they were

7 sent.

8 THE COURT: Duly noted.

9 MR. GOLD: Yes.

10 THE COURT: Mr. Gold.

11 MR. GOLD: Thank you, your Honor. This case, your

12 Honor, is all about digital videodiscs, DVDs, which is the

13 latest technology for watching copyrighted motion pictures at

14 home. Competing with and catching up on the videotape that so

15 many of us are used to, the DVD gives us much clearer, sharper

16 pictures than the videotapes. However, the DVDs can be copied

17 if unprotected. And unlike videotapes, where if you run off

18 one copy, you get a substantial decrease in the quality and

19 two, much more so, and it gets worse and worse so you don't

20 really have a copying problem, with a DVD, you can copy an

21 endless number of them and they're just about as clear as the

22 original DVD.

23 THE COURT: Is the content of a DVD simply a data

24 file?

25 MR. GOLD: Yes, your Honor.



5



1 THE COURT: Okay.

2 MR. GOLD: Now, before plaintiffs were willing to

3 make DVDs available, they decided that they had to have an

4 encryption technology so that the content and their copyright

5 interest in the content could be protected, something that

6 would scramble the picture and scramble the sound. And that

7 system was created, and it is called CSS, which stands for

8 content scrambling system. And you can't watch a movie unless

9 you have an authorized DVD player, and the authorized DVD

10 player has the computer key to the program. So with a DVD and

11 an authorized player, the authorized player will unscramble

12 the picture and the sound and you can watch your movie. But

13 you can't copy it. The CSS technology prevents that.

14 THE COURT: And the key is what? Is it software? Is

15 it hardware? Is it a combination?

16 MR. GOLD: The key is software.

17 THE COURT: Okay.

18 MR. GOLD: So what CSS is is a safety device which

19 protects the copyrighted material. Now, the motion picture

20 studios, in creating DVDs and getting them out to the public

21 and increasing the number, relies not only on the encryption

22 system, not only on CSS because given the developments in the

23 world over the last ten years and even over the last two or

24 three years, it was known to them that there was a possibility

25 that there would be decryption of CSS and there was a lot of



6



1 pressure by many copyright owners to get extra protection from

2 Congress, and a statute called a Digital Millenium Copying Act

3 was passed. And what it created was a new right that a

4 copyright owner would have if he had to protect the system, a

5 technology which would protect his copyrighted material. He

6 got the right to that safety device and the right not to have

7 it circumvented as a matter of federal law. So this is like a

8 guard or a moat surrounding the house, the protected material.

9 THE COURT: Filled with litigators instead of

10 alligators.

11 MR. GOLD: And increasingly so. Yes, your Honor,

12 that's true. And I appreciate the differential between those

13 two. And the act was passed to bring the U.S. in line with

14 the world intellectual property organization which had created

15 a treatise of which there are perhaps 12, 14 countries that

16 have signed it, and this treatise provides legal protection

17 and legal remedies against circumventing technology systems

18 that protect copyrighted devices.

19 So what the motion picture studios are relying on in terms

20 of selling DVDs is their copyright in the motion picture, a

21 licensing system that they have created to allow people to use

22 the copyright, and the anticircumvention law, and what they

23 believe is their right to court enforcement of the

24 anticircumvention law in a rapid and effective way, through

25 preliminary injunctions and then final injunctions. That is



7



1 the safety net, they believe, surrounding their copyrighted

2 material.

3 Now, in late '98, I believe, a technological device,

4 a computer device, was created called DCSS, DeCSS, and I guess

5 it stands for decrypted CSS.

6 THE COURT: Was it '98 or '99?

7 MR. GOLD: '99, did I say 98?

8 MR. HART: Yes.

9 MR. GOLD: Now, what that device does, if you have

10 it, is you have it in your computer, it will unscramble the

11 system, unscramble the movie, unscramble the movie.

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

13 MR. GOLD: It's a computer program. I think that's a

14 technological device computer program, which protects, which

15 does away with CSS. And once it does away with it, it does

16 away with it, you can watch it on your computer, you can watch

17 the movie, copy it, download it, and run off lots of copies.

18 Once CSS decrypts, it decrypts.

19 Now, what we did, as soon as this started to be used was

20 to send out letters telling everybody they had no right to use

21 it, that they were violating the law and we would seek

22 enforcement of the law, and that did an awful lot of good

23 because an awful lot of websites that were posting DeCSS

24 stopped doing it.

25 Then there was a lawsuit that was started in California



8



1 under a trade secret law. The motion picture companies are

2 not parties and don't control in any way that litigation.

3 There was a hearing in court, as I say, in state court, under

4 the trade secret law, to try to enjoin the use of DeCSS.

5 There was a hearing on preliminary injunction; it was not

6 issued and a lengthy hearing was conducted on the preliminary

7 injunction this Tuesday. There has been no decision on the

8 preliminary injunction. However, it is not brought under the

9 Digital Millenium Copying Act; it's brought under state

10 copying, it's brought under state secrecy laws, trade secret

11 laws, and we are not parties to that action.

12 I think what I would like to do, your Honor, since a

13 major defense in the reply papers has been that defendants

14 aren't appropriate parties, I would like to get into who the

15 defendants are and why they have been named and what are they

16 doing. And if I can refer you to the declaration of

17 Mr. Boyden, Bruce Boyden, a lawyer in my office, an associate

18 in my office, in support of the application for preliminary

19 injunction, I will be able to show you just what's happening.

20 THE COURT: I've read your papers. Each of the

21 defendants is listed on some registration or other, the domain

22 name registrations, I suppose, as at least the technical

23 contact, if not other positions, with the registrant of each

24 of three websites that have posted DeCSS. Am I right?

25 MR. GOLD: Yes. Each one of them is posting DeCSS



9



1 and one of them is also linking DeCSS. Now, by that, I mean

2 one of them is posting the names of other websites and, if you

3 click on to the other website, you are delivered to a page of

4 another website on which DeCSS appears, and then, if you

5 double click DeCSS, you get it right into your computer, just

6 as though it was originally done.

7 So one of them is linking as well as posting, but all

8 three of them are posting; except for at the present time

9 we've been advised that one of the defendants, Mr. Kazan,

10 called us and he said that, if we got a court injunction, he

11 would take it down, just send him the injunction. But when we

12 checked in the next several days, he had taken DeCSS off of

13 his website.

14 THE COURT: All right.

15 MR. GOLD: And as your Honor has seen, when you went

16 to our papers, when you go to one of these websites, you just

17 have a section which has DeCSS underlined and you simply put

18 your mouse on that, double click it, and you have DeCSS. You

19 can then watch a DVD without an authorized player and copy it

20 if you want.

21 Now, under the statute, three conditions need to be

22 satisfied: Are defendants offering, providing, trafficking in

23 this device, and is it designed to circumvent the

24 technological measure that's controlling access to protected

25 copyright work? We think it's all very, very clear.



10



1 Circumvent means to descramble, and that's what DeCSS does. A

2 technological measure effectively controls the access here to

3 do the protected work and CSS is such a measure and it's

4 designed to control access to our copyrighted works. Because

5 CSS is an encryption technology, you've got to have a software

6 key to open it, so CSS qualifies as an access control measure.

7 And all of the statutory requirements are met, and defendants

8 are clearly violating them.

9 The statute does say something about primary purpose, and

10 I'd like to get into that for just a moment. Under

11 1201(a)(2), the statute says that no person shall manufacture,

12 offer, provide, or otherwise traffic in any technology, in any

13 technological device that is primarily designed for the

14 purpose of circumventing a technological measure. That

15 effectively controls the access to a work protected under the

16 title.

17 Now, if you look at the statute, if the technological

18 measure did not control access to a copyrighted work, then the

19 statute doesn't apply. For instance, you could have some

20 device that controls access to work that is in the public

21 domain. It's not protected by copyright and the statute

22 wouldn't be applicable. Here, the issue is whether the

23 primary purpose of DeCSS is to get around the safety measure

24 in order to get to a protected, copyrighted work, and the

25 reason that it's so clear it was primarily designed to do that



11



1 is that it has absolutely no other function. There's nothing

2 that you can do with DeCSS except decrypt CSS. That's all it

3 does.

4 So I think the question of the primary purpose is quickly

5 and easily answered by that analysis. Now, there are several

6 exceptions that the defendants have talked about and,

7 naturally, all of the major exemptions are the statute so

8 they're thrown in here and they claim each one of them means

9 that they haven't violated the statute. One of them is a

10 reverse engineering exception. The legislative history that

11 we've cited in our brief makes clear that the reverse

12 engineering exception only applies to a technological device

13 to a program that prevents access to a computer program and

14 nothing else.

15 Congress decided that would promote competition in the

16 computer world, and they did not want to protect computer

17 programs that were guarded in that way by a protective device.

18 But as the legislative history is very clear, reverse

19 engineering does not at all in any way protect or provide an

20 exemption for someone who is getting around a safety device

21 for the purpose of getting at a copyrighted act, at a

22 copyrighted piece of work, a picture or a book or anything

23 like that. The only thing that would be exempted would be the

24 computer program. Now, aside from that, there's nothing in

25 any of the papers before you that would indicate that these



12



1 particular defendants have those kind of skills.

2 All of the evidence would indicate that they're using

3 DeCSS and telling other people to use DeCSS to watch movies

4 that they otherwise would have to watch on licensed players.

5 And they can also download movies, they can trade them with

6 their friends. There's nothing in the record to suggest that

7 these people are involved in or could possibly be involved in

8 reverse engineering. But even if there were, they can't use

9 that exemption here because the exemption only applies to a

10 safety device around a computer program and not around any

11 other kind of copyrighted work.

12 Next, they talk about an exemption because they are

13 doing research and the research has something to do with

14 coming up with an alternate player, a Linux system, a Linux

15 player. Again, one would have to note that there is nothing

16 that indicates that these particular defendants that are

17 before you and charged with violating the statute would be

18 able to do that research.

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

20 argument?

21 MR. GOLD: Yes, there is. And that is that you have

22 to go to the copyright owner and ask his permission and

23 negotiate with him before this exemption applies, and they

24 haven't done it and they don't claim to have done it.

25 THE COURT: But even more basically, you're suing



13



1 under 1201(a)(2), right?

2 MR. GOLD: Yes.

3 THE COURT: And doesn't the encryption research

4 exemption apply only to 1201(a)(1) claims?

5 MR. BAUMGARTEN: No, your Honor. I think there is

6 provision for a limited application, 1201(a)(2), in

7 fairness --

8 MR. HART: It relates to the dissemination of the

9 fruits of the encryption research and provides strict limits

10 on qualified collaborators. They have to be people trained or

11 skilled in the art of cryptology, and the legislative history

12 makes it quite clear, your Honor, that when the encryption

13 device or the tools or the fruits of the encryption/decryption

14 research are disseminated indiscriminately outside of the fold

15 of what you would consider to be qualified researchers that

16 the exemption clearly doesn't apply.

17 There's not only scholarly commentary on the subject; we

18 are dealing with some of the statute, but also substantial

19 legislative history to say there has to be a line between

20 using encryption research as a pretext, if you will, and that

21 which really goes to the pejorative of hacking.

22 MR. BAUMGARTEN: It's clause 4 of paragraph G, your

23 Honor.

24 THE COURT: Clause 4. Okay. Thank you.

25 MR. GOLD: Finally, the defendants claim that the



14



1 statute applied in the way that we're asking the Court to

2 apply it violates their rights to free speech under the First

3 Amendment.

4 Your Honor, this DeCSS, I would submit, is not an

5 expression of anything. It doesn't communicate any ideas.

6 What it is, and I think the closest analogy, is it's a

7 burglary tool. It's like a lock pick. And it has nothing to

8 do with free speech.

9 We would also point out that there is an awful lot of

10 speech on the websites of defendants and many other websites

11 where DeCSS is offered where long soliloquies are given about

12 the inappropriateness of the copyright laws, the

13 inappropriateness of the Digital Millenium Copyright Act, the

14 anticircumvention act. We're not seeking any injunction

15 against any of those expressions or statements of opinion and

16 expression of rights. We're only trying to take out of these

17 websites the thing that says DeCSS that you put your mouse on

18 and click it twice and you have circumvented the protective

19 device on our copyrighted films. That's all we seek from you,

20 both in the case of posting and also in the case of the

21 linking that I described to your Honor before.

22 Touching on irreparable injury, I think, again, it

23 kind of speaks for itself here. The plaintiffs have a huge

24 investment in these copyrighted movies, a huge investment of

25 putting out DVDs. The public has a huge investment now in DVD



15



1 players, and all of this with continued dissemination of DeCSS

2 unabated by the courts will be lost, including a lot of the

3 value of our copyrighted films.

4 On the other side, what is the injury if a preliminary

5 injunction is ordered? For the time it takes to try this

6 case, they -- the defendants -- will not be able to post DeCSS

7 and people won't be able to avoid the safety device on our

8 copyrighted movies. If we lose the trial, they'll be able to

9 in four to eight weeks or whenever the trial is held. It

10 seems to me that irreparable injury concepts and concepts of

11 equity compel the issuance of a preliminary injunction here,

12 even if the Court felt that there was a material issue as to

13 any merits of the case, as to any point that the defendants

14 have raised because the equities tip so strongly in favor of

15 plaintiff that preliminary injunction be issued until the time

16 of trial.

17 With that, your Honor, I'll conclude.

18 THE COURT: All right. Thank you. Who wants to be

19 heard for the defendants?

20 MR. KATZ: Your Honor, we had discussed among the

21 defense counsel, with your permission, we would like to handle

22 several issues separately. Would that be acceptable to your

23 Honor?

24 THE COURT: Sure.

25 MR. KATZ: With regard to the facts, Ms. Gross, do



16



1 you want to take that?

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

3 MR. KATZ: I apologize.

4 MR. LEVY: Thank you, your Honor.

5 I will discuss briefly the facts in this case because the

6 vast majority of them will have to be fleshed out at the trial

7 stage and that is essentially the difficulty that the Court

8 will be facing with this preliminary injunction, and that is

9 they that it did not have all of the information before it.

10 It cannot have all of the information before it.

11 As for the basic premise, yes, we know what DVDs are and

12 we have at least some grasp of what DeCSS purports to do and

13 what it says. And I say what it says and what it does because

14 those are two separate things. Part of the issues that we'll

15 be facing here are the overlap between something it says and

16 something it does. The DeCSS code is just that. It's a code,

17 it has been posted in various different ways. Sometimes there

18 have been discussions intermixed between the code. There have

19 been notes by different programmers, and the code itself is in

20 and of itself an expression of academic importance; that is to

21 say, the cryptology that those who enmesh themselves and have

22 dedicated themselves to the science of ciphering and

23 deciphering and the study of codes are dependent on the

24 continuing research in this field. And so I would take issue

25 with the concept that this DeCSS code is a lock pick. It is



17



1 certainly not a lock pick the instant that it is written, and

2 there are cases that suggest that as soon as something is

3 written there is already a presumption that it is speech.

4 That's certainly the case where the writing is expressive to

5 another and we know that although machine code is difficult to

6 read it can be read by individuals; it's frequently read by

7 individuals. The same is true for the source code. Certainly

8 I don't understand source code very well, but others do, and

9 source code can't even be understood by machines.

10 Now, the other part is that in between that source code,

11 there are various notes and notations of how programmers

12 arrived at different ideas. All of those are expressive. And

13 finally, the plaintiffs, I think, focus only on the

14 distribution of the speech and have failed to discuss the

15 receiving of the speech, and, in this case, that is a very

16 important counterpart to the dissemination. Certainly one is

17 entitled to disseminate, but others -- that is, the public --

18 are also entitled to receive.

19 Now, the facts themselves in this case are likely

20 fairly complex and fairly convoluted. I say "likely" because

21 the defendants had all of one and a half days to present those

22 facts to the Court, and I understand that that issue has been

23 discussed, but I would like to simply flag it briefly.

24 THE COURT: With all due respect, counsel, that

25 statement is simply false. So let's just proceed.



18



1 MR. LEVY: Very well.

2 I think the importance of that statement is that it will

3 require that the Court look very carefully at what is

4 presented to it; that is the extent of the point of my

5 statement.

6 In addition, we would offer to the Court that there are

7 many useful affidavits on file in the California case of which

8 the Court may take judicial notice and review, and we would be

9 happy to put those items before the Court at the end of this

10 hearing.

11 THE COURT: Counsel, the order to show cause was

12 signed almost a week ago. Your clients were served almost a

13 week ago. The order required that any papers you cared to

14 submit be submitted earlier this week. The record is now

15 closed, and it says what it says. Now let's proceed from

16 there.

17 MR. LEVY: I understand. The record that the Court

18 does have before it shows a request by the plaintiffs to

19 curtail a number of individuals, one of whom is a journalist,

20 from expressing what they have discovered. It is not

21 something that they've created; it's simply something that

22 they have discovered and are attempting to publish to others.

23 I, of course, am referring to the defendant and the website

24 2600. That is essentially a news organization and that's

25 their purpose, to offer these things into the public. And



19



1 Peter Katz will be discussing that issue at greater length;

2 that is, the standing issue and the arguments regarding

3 whether or not these individuals are even properly before this

4 Court.

5 Additionally, there are a number of legal issues

6 regarding the Digital Millenium Copyright Act and that, of

7 course, goes to the likelihood of success in this case; that

8 is, whether or not at trial the plaintiffs would be able to

9 show what it is that they have of theirs. And Robin Gross

10 will be fleshing those points out, discussing both the

11 applicability of the Digital Millenium Copyright Act to this

12 particular set of facts and also the appropriateness and the

13 constitutionality of that act in general.

14 THE COURT: Look, I do appreciate the preview, Mr.

15 Levy, but I wish we would get into the discussion instead of

16 the discussion about the discussion.

17 MR. LEVY: Very well. Then I will pass the virtual

18 pulpit over to Ms. Gross to discuss the Digital Millenium

19 Copyright issues.

20 MS. GROSS: I think first Peter was going to talk

21 about the proper defendants and the improper defendants.

22 MR. LEVY: Sorry. That's right.

23 MR. KATZ: Your Honor, I'll run through that quickly

24 for the Court. As I noted, the Court is in receipt of the

25 opposition papers that we had submitted. Judge, we have three



20



1 defendants here. One is a news organization that, as Mr. Levy

2 had pointed out, 2600.com also is involved in a -- it's a

3 distribution of a quarterly document. My understanding is

4 that they have over 50,000 subscribers and receive

5 approximately 10,000 unique visitors on a daily basis who view

6 information that's posted on the site.

7 The defendant who should be named here is 2600.com.

8 2600 Enterprises, Inc. is a corporation. If your Honor, and

9 it's not entirely clear from the documents here, but if

10 someone were to go to its website, on the left-hand side, on

11 the bottom left-hand side of the site, they would see it says

12 2600 Magazine. On the right, they would see the corporate

13 information. And when one goes to what's known as a DNS

14 registry, which has been annexed to the documents in the order

15 to show cause as referred to "who is" through Network

16 Solutions, there is a registry. The registry indicates that

17 2600.com is 2600 Enterprises. And the individual who's named

18 as Emmanuel Goldstein is listed merely as a technical contact.

19 Mr. Goldstein is the defendant in this case.

20 It's the position under Rule 17 of the Federal Rules of

21 Civil Procedure that Mr. Goldstein is improperly named and it

22 should be, rather, the corporation.

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

24 MR. KATZ: Thank you, your Honor. With regard to

25 Shawn Reimerdes, once again, your Honor, we have information



21



1 on his website which has been annexed to the order to show

2 cause indicating a Leach Software, Inc.

3 THE COURT: Before you go on to Mr. Reimerdes, are

4 you telling me that the gentleman you were just discussing,

5 who you said is listed as a technical contact, is not involved

6 in any way in offering to the public or providing DeCSS?

7 MS. GROSS: Actually, it's a journalist who was

8 reporting on it on the website.

9 MR. KATZ: But in terms of providing that document,

10 no, he does not provide the DeCSS. He reports on it. But if

11 you're referring, Judge, to Mr. Goldstein as involved with

12 2600.com, yes, he is involved. It's my understanding that he

13 is an editor and/or reporter of 2600 Enterprises, Inc.

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

15 MR. HART: Thank you.

16 MR. KATZ: I had mentioned Mr. Reimerdes to your

17 Honor and his involvement of Leach Software referring to

18 defendant Roman Kazan. Two parts to him, Judge, one is that

19 he is listed through "who is" as the technical contact for

20 www.Krackdown.com. We understand they had the link to DeCSS.

21 Mr. Kazan is what's known as an ISP. He's a host. His

22 company -- actually, that's how we get involved in the proper

23 party -- his company, which is Escape.com, hosts sites. My

24 understanding is that Escape.com hosts approximately a

25 thousand sites and the purpose, his business, is to provide



22



1 hosting. He does not have actual control over these

2 individual websites and Krackdown.com is the site. However,

3 Escape.com is the actual host and the distinction is very

4 important, your Honor. When we deal with Mr. Kazan and his

5 corporation, which is very clear on his DNS registry, at the

6 very top is registrant Kazan Corporation, administrative

7 contact Roman Kazan. We say that he would fall also as an

8 improper party, as it should be Kazan Corporation.

9 THE COURT: I don't get this improper party concept

10 at all.

11 MS. GROSS: Perhaps I could explain it.

12 THE COURT: Perhaps I could finish the point,

13 Ms. Gross.

14 Rule 17 says that every action shall be prosecuted in the

15 name of the real party in interest. Now, the people who are

16 prosecuting this case are not your clients. They are

17 defendants and they either are or they're not liable. And so

18 far I don't have before me an affidavit from any of them

19 saying that we have nothing to do with providing or making

20 available DeCSS.

21 MR. KATZ: Your Honor, if I could be heard with

22 regard to Mr. Kazan in that he falls under the immunity

23 provided by DMCA which is Title 2, which is entitled the

24 Online Copyright Infringement Liability Limitation Act.

25 THE COURT: What's the citation?



23



1 MR. HART: 512.

2 THE COURT: Of the Copyright Act?

3 MR. KATZ: Yes, your Honor.

4 MS. GROSS: 17 U.S.C. 101, and then the specific --

5 that's the Online Copyright Infringement Liability Limitation

6 Act.

7 MR. HART: 512.

8 MS. GROSS: Give me one second.

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

10 MS. GROSS: Section 512(c) limits liability for

11 information residing on systems or networks at the direction

12 of users and limits the liability, for injunctive or other

13 equitable relief, for information of copyright by reason of

14 the storage at the direction of a user, which is exactly

15 what's going on in this case.

16 MR. KATZ: Judge, the limitations have about four

17 parts to them under 512(c), the transitory communications

18 caches, storage of information, direction of users and

19 information location tools. The limitation pursuant to

20 512(c) --

21 THE COURT: Just a minute. Before we get carried

22 away in the minutia of 512(c). What 512(c) provides, if I'm

23 reading it correctly, is a limitation on liability for

24 infringement of copyright. Am I correct?

25 MR. KATZ: Yes, your Honor.



24



1 THE COURT: Your clients are not being sued for

2 infringement of copyright. They're being sued for violation

3 of Section 1201. Right?

4 MS. GROSS: But 1201 is designed to protect

5 copyrighted work.

6 THE COURT: Maybe so, but it's not infringement of

7 copyright. Isn't that true, counsel?

8 MS. GROSS: I'm sorry.

9 THE COURT: An infringement of copyright, by

10 definition, is the violation of the copyright proprietors'

11 exclusive rights as conferred in the Copyright Act. That is

12 not what your clients are charged with, as I understand it.

13 So I don't see what the applicability of 512(c) to this is at

14 all. Now, if I'm mistaken, that's the reason I raised the

15 point; I'd like to hear about it.

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

17 THE COURT: That doesn't make it any better.

18 MS. GROSS: But I think that it's a jump to say you

19 can't violate one, or you have to say you have to violate one

20 without the other.

21 THE COURT: Come again, please.

22 MS. GROSS: I'm sorry. It seems to me that there's

23 no direct infringement. If you were not infringing a

24 copyrighted work then there's nothing that shows how anyone is

25 providing a tool to others that are doing that.



25



1 THE COURT: The charge against your clients is

2 providing a device which is a means for circumventing an

3 access limiting factor. The infringement would be done by

4 someone else, although it might be done by your client, it

5 need not be. Nor is the infringement essential to the

6 violation of 1201. Is there some error in that, counsel?

7 MS. GROSS: I think you need to have -- I'm sorry.

8 MR. LEVY: Essentially, your Honor, our reading of

9 the DMCA, certainly in order to make it a constitutional

10 reading, is that it does not outlaw any type of decryption.

11 It only outlaws decryption that affects copyrighters' rights,

12 and to that extent the two are read together; that is, it is

13 not the case that as soon as you engage in the science of

14 cryptology you have violated the DMCA, though certainly those

15 raise other constitutional issues. That's essentially what we

16 are saying. Is that clear?

17 THE COURT: What you've said is clear. It's just

18 very different from what Congress said.

19 MR. LEVY: I think we're working on finding the

20 citation, if the Court will bear with us. It's a rather

21 lengthy statute. Perhaps we'll continue looking through that

22 and we can move on.

23 THE COURT: Okay.

24 MR. KATZ: Your Honor, at this time, I'll turn this

25 over to Ms. Gross to handle the DMCA issues.



26



1 MS. GROSS: Okay. First I'd like to talk a little

2 bit about the standard for issuing a preliminary injunction,

3 and you have to, as the plaintiffs have pointed out, show a

4 threat of irreparable injury and likelihood of success on the

5 merits or series of questions and balances that equities tip

6 in their favor. So with that as our starting point, let's

7 talk about injury.

8 I think it's important to note, and I'd like to draw the

9 Court's attention to the fact, that in all of these hundreds

10 of papers that we've been deluged with the last couple of days

11 there's not a single sentence that talks about current or

12 actual harm. Everything in the documents that have been

13 submitted to us only talks about speculative harm, possible

14 harm, potential for harm. I'd like to just draw the Court's

15 attention to a couple in particular. If you look at the

16 Atwater declaration, let's see, paragraph 12, the harm alleged

17 is that the plaintiff would have to abandon DVD in favor of

18 another format, and I don't think that asking businesses to

19 consider alternative methods is a proper type of harm for a

20 court in order to issue an injunction.

21 Additionally, in that same declaration, the next

22 paragraph, they talk about plaintiffs' potential loss and then

23 the sentence ends it by saying it could well be higher and so,

24 again, it's all speculative, potential, possible, future,

25 maybe harm. If you look at paragraph 16, it says there is



27



1 even --

2 THE COURT: Ms. Gross, let me save you a little time.

3 If all of the harm already had occurred, you would be arguing

4 that I shouldn't issue an injunction because there's no need

5 for it. Injunctions are issued to protect against threatened

6 harm which, by definition, is future harm.

7 MS. GROSS: But what I'm saying is this is

8 speculation because it's all based on if this other thing were

9 to happen, then there would be harm. So they're skipping a

10 step in between. There's an assumption that this other thing

11 will happen that will then cause there to be harm.

12 THE COURT: What do you think people are going to do

13 with DeCSS, put it on floppy disks and use it to fertilize the

14 garden?

15 MS. GROSS: No, actually, because it wouldn't fit on

16 a floppy disk, which is another reason --

17 THE COURT: I stand corrected. Their hard drives.

18 MS. GROSS: You could put about one on your hard

19 drive in which case it makes a player and your computer

20 becomes your player, and that is actually what is the case

21 here. In fact, this computer program is --

22 THE COURT: Ms. Gross, is there the slightest doubt

23 that DeCSS can be used to permit one who has it to make

24 unauthorized copies of copyrighted movies?

25 MS. GROSS: Well, DeCSS, by itself -- all DCSS is is



28



1 a part, a piece of a player that's under construction. It's

2 computer code taken from a project where they were trying to

3 build a DVD player, and this is the part of the program that

4 handles the descrambling and the playing and so it itself does

5 not circumvent a right because all it does is play.

6 THE COURT: Okay. Could you answer my question.

7 MS. GROSS: I'm sorry. Could you tell me your

8 question?

9 THE COURT: Is there the slightest doubt that it

10 would permit somebody to copy CSS scrambled material?

11 MS. GROSS: I believe you could copy it onto your

12 hard drive, but, again, it's sort of like putting your tape in

13 your VCR player and, yes, your television set, your screen,

14 now has made a copy, analogously. Same like a computer when

15 you put your DVD in, but, again, it's a copy that you are

16 making only temporarily to be played on your player.

17 THE COURT: And once you have that on your hard

18 drive, can't you churn out as many of them as you want?

19 MS. GROSS: Perhaps your hard drive or your computer

20 will do that, but this particular program is separate from

21 what your computer will do or not do, you know. That, again,

22 is speculation. It's saying that using this program in

23 conjunction with something else, and even if that is not the

24 case --

25 THE COURT: Now, look, Ms. Gross, please. I really



29



1 think that it's a mistake to assume that you're talking to a

2 moron. On one of your clients' websites, it says, and I

3 quote, "Yes, you can trade DVD movie files over the Internet."

4 Now, is that true or not?

5 MS. GROSS: Actually, I don't -- I'm not aware of

6 anyone who is doing this and particularly because it's

7 impossible for practical purposes. It would take over 300

8 hours.

9 THE COURT: So why do you think your client said

10 that?

11 MS. GROSS: Well, it could be, it could be a source

12 video, something that someone else has authorized. It doesn't

13 have to be an unauthorized movie that he's talking about.

14 There's no assumption that it's illegal copying or illegal

15 trading.

16 THE COURT: And why do you suppose right after that

17 he put on his website: "Notice the DVD Copy Control

18 Association," which I understand to be the movie industry

19 here -- is that right -- "are cock suckers"?

20 MS. GROSS: I think that while that kind of language

21 is certainly inappropriate, nonetheless, it is of itself not

22 speech that can be enjoined, and I think if my client were

23 present to answer that question, he would say it's because of

24 all the cease and desist letters going out over the Internet

25 and shutting websites down based on fear of litigation, and a



30



1 lot of people are very upset because they feel their civil

2 liberties are being trampled on, and that's the reason for the

3 statement. And I'm not going to defend the statement.

4 THE COURT: Ms. Gross, if it were the case, as you

5 seem to be trying to imply, without saying, that DeCSS does

6 not permit unauthorized copying of copyrighted movies recorded

7 on DVDs, I would imagine you would have said that to the

8 plaintiffs and they would have taken you up on the offer to

9 demonstrate it and they wouldn't have bothered hiring a

10 high-priced law firm to come in here and sue you all. I don't

11 think it's for exercise. That doesn't mean they're right, but

12 nobody has said under oath before me that the assertion that

13 you can copy DVDs using this software is false.

14 MS. GROSS: I think that it's important to look at

15 the actual wording of the statute in question here, and we're

16 talking about Section 1201(b) and they say no person shall

17 manufacture, etc., offer to the public, etc., for the purpose

18 of circumventing protection that effectively protects a right

19 of a copyright owner. So I think it's important to note that

20 what we're talking about here is a circumvention that protects

21 a right of a copyright --

22 THE COURT: I'm sorry. Tell me exactly where you're

23 reading from.

24 MS. GROSS: Section 1201, which is the circumvention

25 copyright protection system.



31



1 THE COURT: 1201 what?

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

3 THE COURT: All right.

4 MS. GROSS: Then (b)(1)(A) we're talking about

5 here --

6 THE COURT: Now what about --

7 MS. GROSS: What we're talking about --

8 THE COURT: Ms. Gross, don't get carried away. What

9 about (a)(2), which is the statute you're being sued under? I

10 mean, I'm sure the Internal Revenue Code isn't a big problem

11 for you on this either.

12 MS. GROSS: Because --

13 THE COURT: It says that you can't offer to the

14 public any technology, product, service, etc., that's

15 primarily designed or produced for the purpose of

16 circumventing a technological measure that effectively

17 controls access to a protected work. Now, is there any doubt

18 that CSS protects access to a copyrighted work? Is there any

19 at all?

20 MS. GROSS: Agreed.

21 THE COURT: Is there any doubt at all that DeCSS is a

22 device that circumvents CSS?

23 MS. GROSS: It does descramble it.

24 THE COURT: Okay.

25 MS. GROSS: But that --



32



1 THE COURT: With that established, let's proceed.

2 MS. GROSS: But it's not primarily designed to do

3 that. It's not designed to be a player. This is software

4 that was taken from a project that was being built for a new

5 DVD player. So it's just a component of a player. And so,

6 therefore, it was not primarily designed to circumvent. It

7 was designed to act as a player and the player is not the

8 right of a copyright owner. Copying is not prohibiting from

9 playing.

10 THE COURT: Is it not an exclusive right of the

11 copyright owner to make copies of the copyrighted work?

12 MS. GROSS: It is. It is, except for the fair use

13 exception, and it's very clear in copyright law that

14 copyright -- that owners of legitimate copies have a right to

15 make fair use, and that's not something that's in dispute

16 here. And so when you put this DVD in your computer, you're

17 making a fair use. You are playing the copy that you have.

18 You have to be able to put it on your computer in order to see

19 it on the screen. So, yes, a copy technically has to be made,

20 but only for the purposes of playing. It's not something that

21 can practically be used to make lots of copies. It's not

22 possible.

23 THE COURT: And fair use is a defense to

24 infringement, right?

25 MS. GROSS: That's right.



33



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

2 MS. GROSS: But we're talking about -- we are talking

3 about something that is primarily designed or produced for the

4 purpose of circumventing a right, and so it is not a right to

5 prevent fair use. Copyright owners do not have the right --

6 THE COURT: You're quoting the wrong statute again,

7 Ms. Gross.

8 MS. GROSS: I don't believe so. This is the statute

9 in question here.

10 THE COURT: Let me rephrase that. You're quoting the

11 section of the statute they didn't sue you on. You're not

12 quoting the section they did sue you on.

13 MS. GROSS: But, see, they don't have a right to stop

14 the fair use here, so this isn't something that --

15 THE COURT: Under (a)(2) they don't need to. That

16 argument might have some merit if it were a (b)(1) suit or a

17 (b)(2) suit, but it isn't.

18 MS. GROSS: Okay.

19 THE COURT: Okay. So what else?

20 MS. GROSS: You have to read the two together because

21 (b)(A)(2) says as used in this section. So (a)(2) is simply

22 the defining criteria for (a)(1).

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

24 MS. GROSS: (a)(3)?

25 THE COURT: That's the one that starts with "as used



34



1 in this subsection."

2 MS. GROSS: That's (a)(2).

3 THE COURT: No, that's (a)(3).

4 MS. GROSS: Right?

5 THE COURT: (a)(3). Look, if you have other points

6 about the statute, you better get to them.

7 MS. GROSS: I'm sorry.

8 MR. LEVY: I apologize, your Honor. Some of the

9 difficulty here is because we are all using different copies

10 of the statute. There might be some confusion. We're trying

11 to review what the courts have said and ensure that we're all

12 on the same page, and Ms. Gross is madly flipping through our

13 version of the DMCA to make sure that we understand where the

14 Court is coming from and also what we're saying.

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

16 MS. GROSS: Okay. Well, I think it's important -- I

17 think it's important to note some of the clauses that are

18 specifically mentioned in this same code section.

19 THE COURT: I'm ready to listen to you.

20 MS. GROSS: It specifically says, if you read

21 1201(c), it basically says nothing in this section shall

22 affect the right of, including fair use, under this title. So

23 this section is saying it doesn't affect fair use and these

24 people are making fair use.

25 THE COURT: Ms. Gross what you did was to read about



35



1 half the words of that paragraph.

2 MS. GROSS: I can read the whole one, but I picked

3 out the ones --

4 THE COURT: That helped you. What you did is left

5 out the ones that hurt you. It says, "Nothing in this section

6 shall affect rights, remedies, limitations or defenses to

7 copyright infringement" -- those are the words you left out --

8 "including fair use." In other words, were you being sued for

9 copyright infringement, nothing here would take away your fair

10 use defense. But you are not being sued for copyright

11 infringement.

12 MS. GROSS: If there's no copyright to violate, how

13 is a device being enjoined to protect that right?

14 THE COURT: Ms. Gross, if you have another point to

15 make, you better get to it.

16 MS. GROSS: I think at this point I will turn it over

17 to -- Allonn will talk about the First Amendment issues.

18 MR. LEVY: Your Honor, I'd like to discuss one final

19 point on the likelihood of success, which touches upon the

20 First Amendment issue, which is essentially, if we read this

21 statute with the type of breadth that I think that we're

22 talking about here, that essentially what we're saying is that

23 any type of computer code that decrypts something is illegal,

24 that would be an unprecedented disruption of our First

25 Amendment rights to, in this case, participate in or in any



36



1 way discuss a totally legitimate area of educational work.

2 And that is encryption.

3 Cryptology has been around for generations. It's

4 incredibly important. There are thousands and thousands of

5 individuals in this country who dedicate their entire lives to

6 learning, understanding, and bettering this very important

7 field. I think that if we read the DMCA as saying that --

8 that is, that it does not matter what it is that you're

9 decrypting, that it's simply the act of decrypting itself as

10 put in computer code -- that is an impermissible and

11 thoroughly unconstitutional reading of that statute, which, of

12 course, for our purposes -- the only reason that's important

13 for our purposes, it would mean that the plaintiffs cannot

14 succeed on the merits of their case, and I'll just flag that

15 point very quickly.

16 Now, the other First Amendment issues come into play for

17 this particular hearing. This particular hearing requests

18 preliminary relief, and the relief that it requests is a

19 removal from, among other things, a press site of what is

20 essentially offending speech. Now, plaintiffs' counsel points

21 out that there are many words on that site that are rude and

22 are inappropriate. Of course, we have the Cohen case, which

23 is the illustrious or famous draft case, and I'm sure the

24 Court is aware of that point. We all have well ingrained in

25 our history that it is permissible to be rude.



37



1 THE COURT: Look, Mr. Levy --

2 MR. LEVY: That is admittedly a side point because

3 they're not trying to enjoin --

4 THE COURT: It's a nonpoint. They're not talking

5 about that.

6 MR. LEVY: True. Admitted, to the extent that that's

7 not the relief that they request. I merely bring it up

8 because we ought not get lost in the fact that because these

9 folks may be are a bit irreverent we should jump to the

10 conclusion that they are bad or they are doing something

11 improper. That's the only purpose for my comment on that.

12 The matter that they are attempting to suppress,

13 however, is the DeCSS speech in its various forms, and, as

14 we've discussed, that is information that is readable by

15 individuals. Indeed, both from the standpoint of those

16 involved in cryptology and also now because of the various

17 lawsuits involved, to the wide public, this matter has become

18 a public issue. It is a matter of public concern and the

19 individuals that are trying to suppress this are actually

20 trying to suppress ideas.

21 Now, the point here is that in order to have a free

22 discourse and a free discussion, you must be able to reference

23 things. Drawing on my limited experience, I can only address

24 some of the facts that are in the California case. Here the

25 San Pedro Mercury News is our sort of local news. It's very



38



1 well respected and it has also links to these sites because

2 it's a matter that should and is being discussed in public

3 forums. Now, to step in and stop that speech, I would submit

4 to the Court --

5 THE COURT: No one is asking to stop any speech about

6 this issue. What is being requested is an injunction

7 preventing the dissemination of the DeCSS program.

8 MR. LEVY: Your Honor, respectfully, I would submit

9 to you that the link itself is speech. Now, if you remove the

10 link, are we really to stop telling people where to go to get

11 information? I would submit that that's improper. The code

12 itself is also speech. I cannot cite the Court directly to

13 the appellate Bernstein decision which is on review, but

14 certainly the arguments are the same. And, additionally, we

15 have guidance from Bernstein one, which is noted in our

16 papers, that has very carefully reviewed this issue and found

17 that the code itself is in fact speech. Indeed, in our

18 case --

19 THE COURT: But, Mr. Levy, let's suppose that's true.

20 That does not mean you win, does it?

21 MR. LEVY: It does not.

22 THE COURT: So let's get on to the more important

23 issues.

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

25 we win.



39



1 THE COURT: Let's just explore that. Suppose you

2 opened a hamburger stand and you put in front of it two golden

3 arches to express something about your hamburgers and you put

4 up a big sign that said Levy's McDonald's to express the idea

5 that your hamburgers were as good as theirs and you were sued

6 by McDonald's for trademark infringement. Now, do you think

7 that if you went into court and said, Well, I'm just speaking

8 out here and conveying an idea that that would get you even

9 remotely partway down the first baseline?

10 MR. LEVY: I think it would get me partway down and I

11 think I would be stopped partway down. I think that what the

12 Court would do is it would hold a full hearing on that issue.

13 I think that there would be evidence adduced on both sides and

14 if, indeed, those arches were found to be a property right and

15 that property right was stolen, then the Court would say,

16 Well, perhaps you have speech here, but you don't have

17 protected speech here. And so the prior restraint doctrine

18 does not apply.

19 But that's not what we have here. We don't have stolen

20 speech. We have speech that was independently created, we

21 believe, we suspect. And we have commentary on that speech.

22 And I should point out that when I say "commentary," I also

23 mean within some of the source code, and there have been

24 postings all over so I cannot tell the Court which one is

25 which. But there are discussions within the source code



40



1 reminding the Court that source code is intended for

2 programmers only, it does not run on a machine, that discusses

3 the code.

4 THE COURT: But these would be nonexecutable program

5 notes, right?

6 MR. LEVY: That's correct. Now, I suspect that

7 because --

8 THE COURT: And when the program was compiled, the

9 programmer's notes would not be compiled into object code,

10 right?

11 MR. LEVY: That's correct. That is correct.

12 THE COURT: Is anybody trying to restrain the posting

13 alone of programmer's notes without the source code, the

14 executable instructions?

15 Mr. Gold?

16 MR. GOLD: No.

17 THE COURT: No. Let's move on.

18 MR. LEVY: The notes are intermingled within the

19 source code and they are commentary within that source code,

20 so if you suppress the source code, you have suppressed --

21 THE COURT: But nobody's trying to stop you from

22 disconnecting the programmer's notes from the compilable

23 executable instructions and doing whatever you want with the

24 programmer's notes.

25 MR. LEVY: True, but you lose access to the



41



1 programmer's notes as soon as you lose access to the source

2 code. But if you suppress the source code, you have also

3 suppressed additional speech.

4 THE COURT: Counsel, that's simply a bald assertion

5 and we all know it not to be true. I would take judicial

6 notice that it's not true.

7 MR. LEVY: I'm sorry?

8 THE COURT: I said we all know that isn't true and I

9 would take judicial notice, if I needed to, that it isn't

10 true.

11 MR. LEVY: Judicial notice of the fact that --

12 THE COURT: That the programmer's notes are available

13 to whoever has the source code and even if you were enjoined

14 from disseminating the source code itself, as distinct from

15 the programmer's notes, they're not going to vanish.

16 MR. LEVY: I'm sorry, your Honor. I actually have a

17 technology expert with me. Would the Court like to or would

18 they agree to hear a very brief statement on this point from

19 that expert?

20 THE COURT: No.

21 MR. LEVY: I'm sorry?

22 THE COURT: No. Let's go on.

23 MR. LEVY: As an example, and by way only of

24 argument, Frank Andrew Stephenson, who is one of the

25 individuals who created the LVD project, which is the player



42



1 that eventually made this playable on Linux, was able to

2 create his innovations by reading the source code and the

3 expressions within that source code. And I use that to show

4 the Court that, first, the two aren't inseparable -- that is,

5 the source, the bits of code and the programmer's notes --

6 and, second, to show its utility; that is, that there is a

7 very real need and a use for the posting of this code.

8 Now, going back briefly to your Honor's analogy of

9 the golden arches, we do not have a situation here where there

10 is, if you will, stolen speech that has gained a property

11 value to it. What we have is allegedly offending speech that

12 may run counter to a state -- I'm sorry, a federal provision.

13 THE COURT: Let's start off with the fact that your

14 premise about property rights and trademarks is really highly

15 inaccurate and the basis of trademark protection lies not in

16 some theoretical property right and the senior user, but

17 rather in the fact that the junior user's use of the mark in

18 circumstances where it is likely to lead to confusion in the

19 marketplace ought to be enjoined in the public interest.

20 Now, you're welcome to go on from there, but the premise

21 of your analysis is wrong.

22 MR. LEVY: I think that that's an excellent point. I

23 used the term "stolen property" because it's easier for my

24 feeble brain. But, yes, the point and what the courts

25 generally hinge on is that ability to make a mistake. That



43



1 is, you'd ride into the burger stand, you see the golden

2 arches, you think, Oh, McDonald's, and you walk in.

3 There's no such danger of mistake here. It's a completely

4 different type of speech, and I would submit that we are not

5 permitted to carve out a new exception for speech that simply

6 would seem to run counter to a federal provision. In fact, I

7 would cite the Court to the DMCA, and I shall work a bit

8 harder to try to get the letters correct here. We are on

9 Section 1201. I believe this is (c)(3). And again -- I'm

10 sorry. It's (c)(4). And this, again, is in regard to the

11 entire act, not a certain portion of it. It says, "Nothing in

12 this section shall enlarge or diminish any rights of free

13 speech or the press," which is involved here, "for activities

14 using consumer electronics, telecommunications or computing

15 products." And that is the portion in its entirety.

16 So it's very important that we not use this particular

17 statute to create a new exception to the prior restraint

18 doctrine. And I submit to the Court that the evidence that's

19 been put before it -- that is, as the Court noted, exclusively

20 that of the plaintiff -- does not come close to raising to the

21 level of national security and the like that we have in the

22 Pentagon papers and the Progressive case and other similar

23 cases. Certainly using the Progressive case, if we cannot

24 even do a preliminary injunction to enjoin seriously dangerous

25 speech such as the H-bomb instructions, because it is speech



44



1 after all, as well as potentially classified military

2 information, we certainly ought not issue a prior restraint on

3 the manner in which DVDs work. The interest to the public is

4 simply not that important.

5 Now, if we are incorrect, if our analysis of the DMCA is

6 wrong, then that can be proven at a trial, but certainly not

7 before that. And I would submit to the Court that this line

8 is a rather dangerous one of going down, and attempting to

9 reach this decision prior to the trial in that it will

10 seriously chill not just the speech rights of those who are in

11 this suit but it will do the same for other individuals who

12 post information on their websites because, again, assuming

13 that there is some type of original sin here, assuming that

14 there is a problem with the DMCA, these individuals didn't

15 cause it; they merely found something and they put it on their

16 websites. I think that when deciding how we would like our

17 Internet policed we ought to be very careful to ensure that we

18 retain our traditional rights to express ourselves freely and

19 to provide others with information.

20 THE COURT: Would you say the same thing if they

21 posted the text of a copyrighted book?

22 MR. LEVY: Likely not. And, again, though I might

23 say it at the preliminary stage, and certainly there are

24 several very interesting and illustrative Law Review articles

25 that discuss exactly this problem, and that is that courts may



45



1 have accidentally run afoul of prior restraint issues in some

2 copyright cases because they did not wait until a full and

3 final hearing is done, they did not satisfy themselves that

4 indeed this does fall within the copyright exception, and

5 instead they rushed forward in a rush to judgment. And I

6 really hate using that term, following the OJ Simpson case,

7 but I feel that I have to in prior restraint cases, that they

8 have rushed to judgment and they have accidentally restrained

9 speech where they perhaps ought not have. And as one of many

10 illustrations, I would cite the Court to an interestingly

11 article, 48 Duke Law Journal 147, which is freedom of speech

12 and injunctions in intellectual property cases.

13 Now, this argument is exclusively aimed at the preliminary

14 injunction hearing. As for this argument only, defendants

15 could be 100 percent wrong on everything else, but as for the

16 restraining of this speech prior to it reaching the intended

17 audience, courts must exercise the highest diligence possible.

18 In fact, some reasoners, of course, do not particularly agree

19 but are nonetheless helpful, have reasoned that the only

20 reason for the First Amendment is the prior restraint

21 doctrine. It is that important. It essentially allows

22 courts, and certainly I would not suggest that that would be

23 the case for your Honor, but it allows courts to be make

24 mistakes. It says, Well, we are going to make a judgment

25 about speech here. That's that we allow it to reach its



46



1 intended audience first, we take our time, we look at the

2 information carefully, if it is wrong, then the plaintiffs

3 have their remedy, which is --

4 THE COURT: Let's suppose, counsel, that your client

5 had broken into the vault at Coca-Cola and stolen the formula

6 that they've protected for the last hundred years and somehow

7 Coca-Cola discovered that they were going to publish it in the

8 Atlanta Constitution, tomorrow. Would you make the same

9 argument about no preliminary injunction, we have to have a

10 full trial?

11 MR. LEVY: I likely would, because there, the danger

12 that the court is simply wrong is much too great. If the

13 information is stolen -- I'm assuming that we're assigning a

14 property right. That is, if, as the case I believe is, for

15 Coca-Cola, there is simply, it's simply a trademark case, then

16 my answer -- I'm sorry, a trade secret issue, then my answer

17 would be a resounding no. They have an absolute right to

18 publish that. Not only should there be a prior restraint, the

19 case would likely go in favor of the Atlanta press. But

20 assuming that the information itself was somehow wrongful,

21 that it was unprotected for some reason, then, yes, a prior

22 restraint would likely still be inappropriate because you must

23 prove that the speech is wrongful before it can be restrained.

24 It has to be done with the utmost care, and a preliminary

25 injunction is not the way in which that ought to be done.



47



1 Does that answer the Court's question?

2 THE COURT: It does.

3 MR. LEVY: Okay. Now, the other part of the free

4 speech issue is that of those who are receiving speech.

5 Again, as we've discussed previously, there is a wide body of

6 academic interest in this case completely separate from the

7 plaintiffs' economic desires. There are very high-level

8 individuals who deal exclusively in cryptography who are

9 fascinated by this particular topic. And in order to allow

10 their field to advance, they must have the ability to exchange

11 information amongst themselves, otherwise you arrive at a

12 situation where you simply do not have the means in which to

13 produce either good encryption or good decryption, both of

14 which, I submit to the Court, are very vital to this country.

15 Now, the importance of that fact -- that is, whether

16 or not they are able to get this information, certainly as has

17 been cited in papers -- there is case law supporting that

18 there is a First Amendment right to receive speech in addition

19 to the First Amendment right to publish speech. So here we

20 have an issue where both interests are at stake. And, again,

21 in the interest of prudence, I would suggest that the Court

22 must not issue the preliminary injunction, instead must weigh

23 and look at this information carefully, thoroughly, with

24 affidavits before it, and weigh the information before

25 restraining any free speech rights.



48



1 I would also point out to the Court, and this is

2 beginning to move away from the free speech argument and

3 simply into general preliminary injunctions, and that is the

4 issue of harm. Now, when looking at the relevant harm that

5 might be caused by a preliminary injunction, I would submit to

6 the Court that not only does this harm not tip in favor of the

7 plaintiffs, quite to the contrary, it tips substantially in

8 favor of the defendants. And I submit that to the Court on

9 the following:

10 The plaintiffs themselves have, as has been briefly

11 discussed previously, offered conjecture as to why there would

12 be harm. They have offered no testimony that DVD sales have

13 dropped. They have offered no testimony that piracy has

14 increased. They have offered no testimony showing that that

15 is actually what is going on here -- that is, that this is a

16 piracy tool -- when, in fact, all of information suggests the

17 contrary. It is a Linux tool that was made by individuals who

18 have no interest in piracy. Their exclusive interest is in

19 being able to play DVDs on their boxes.

20 Now, in addition to the lack of harm on their part -- and

21 I'm sorry, I should step back for just a moment because I

22 recall that the Court previously addressed the idea of harm,

23 and so I will point out to the Court that this is not a

24 situation where this code was put out on the web yesterday.

25 This is a code that has been out on the web since October, at



49



1 least. That is, that's information that we have.

2 Now, the information does not deal with -- I'm sorry. Let

3 me step back. The code has been out since October and between

4 October and now, if there was this immediate irreparable harm,

5 certainly it would have already shown itself. Certainly over

6 in excess of four months, something would have happened if we

7 have this immediate irreparable harm, this danger looming over

8 our heads. There is no information that there is something

9 that they've made this more dangerous today. No. The

10 preliminary injunction seeks to restrain just these three

11 people from continuing to disseminate the information. The

12 plaintiff has failed to show why there is a difference today

13 from four months ago.

14 THE COURT: First of all, it was three months,

15 counsel, and, second of all, the argument that I take from

16 their papers --

17 MR. LEVY: I apologize, your Honor. I missed the

18 first part of your statement.

19 THE COURT: First of all, it's three months, not even

20 quite three months, since October 25. At least on my

21 calendar, it is. And, secondly, I take from the plaintiffs'

22 papers the following: It's their submission, as I understand

23 it, that initially the dissemination on the web was fairly

24 limited, that they protested to ISPs, and that in many, if not

25 most, cases, the ISPs immediately pulled the material. The



50



1 lawsuit was then brought in California. That provoked an

2 enormous backlash in the hacker community, led to enormous

3 numbers of postings and frenzied efforts to mirror and

4 otherwise disseminate the program in what would appear to be

5 an attempt by your clients and others to get this so widely

6 disseminated that the genie never could be put back into the

7 bottle and that, basically, that last part has happened in the

8 last three to four weeks.

9 Now, that's essentially what I drew from the papers. If

10 there's something wrong with that argument, I'm willing to

11 listen to it. But for you to tell me they haven't addressed

12 the point or have offered nothing is the kind of hyperbole

13 that doesn't advance your case.

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

15 that point.

16 I would point out a number of issues. Now, first, the

17 concept of a limited exposure on the web, I would submit to

18 the Court, is unsupportable. The web by its nature is a forum

19 that reaches millions, and I would draw the Court's attention

20 to the extensive discussion in ACLU v. Reno cited in

21 defendants' papers. So I would reject the notion that a piece

22 of text that is posted, if you will, in the village square and

23 is electronically replicated in every other village square has

24 somehow been disseminated in a limited manner.

25 As for the factual issue that it is three months instead



51



1 of four months, I'm informed by counsel that the Court is

2 correct. October 6 apparently is the first posting that we're

3 currently aware of. There may have been ones before, but we

4 do not have that evidence before us. And I think the Court

5 also flagging another related issue that although it may have

6 been addressed since, as I have informed the Court, I have not

7 been able to carefully review all papers, I would offer this

8 as an affirmative argument, and that is the futility of

9 enjoining three individuals from posting this information on

10 their websites. Certainly the Court need not undertake a

11 futile task, and, by the plaintiffs' own papers, this

12 information is posted in tens of thousands, possibly hundreds

13 of thousands, of other sites, not just throughout this country

14 but throughout the world. There are serious questions of the

15 reach of this Court; that is, whether or not the preliminary

16 injunction could be enforced. And I'm sure counsel will

17 suggest ways in which one could go into another court and

18 request leave that the sister court in another country comply

19 with your Honor's ruling, but I would suggest to the Court

20 that when one thinks of other countries such as Iran and

21 Syria, I'm not convinced that that would actually work and

22 certainly I know of no precedent where it has worked.

23 And the futility argument is particularly important

24 when one links it to the free speech issues for individuals.

25 It goes to the question of harm to the public and harm to



52



1 these defendants, and I shall focus on the harm to the public

2 because to me it is so glaring. I've discussed briefly the

3 importance of this information to other researchers, to other

4 cryptographers, and I have discussed it in sort of the

5 microcosm of scholarly academia, but I have perhaps not

6 addressed it on the public debate side.

7 THE COURT: Counsel, we're going to have to wrap this

8 up sometime.

9 MR. LEVY: Very well.

10 THE COURT: And I'm going to give your side another

11 six or seven minutes.

12 MR. LEVY: Very well. I will, in that case, do

13 things a bit more speedily. I think that the preliminary

14 injunction that has been requested is, although it may appear

15 to be limited when one looks at the order and when one looks

16 at the individuals that have sued, the types of rights that it

17 attempts to curtail are of such importance that this Court

18 ought not grant the relief that is requested, that it ought

19 not curtail the discourse that is currently taking place, and

20 that instead, it allow this matter to proceed to trial where

21 the information is more fully briefed, where the individuals

22 who are far more technically knowledgeable than, I would

23 submit, I am are able to educate the Court and the attorneys

24 as to what the information actually does. We anticipate that

25 that would show that the DeCSS system was always intended to



53



1 be a player, that neither of these individuals or others were

2 sort of seagoing pirates; they were simply individuals who

3 wanted to play DVDs that they purchased on their Linux boxes.

4 They could not do that without DeCSS; they can do it with

5 DeCSS.

6 As for the concept that it may be distributed over the

7 web, a DVD holds 5.2 gigabytes of information. The ability to

8 distribute that type of information over the web is

9 nonexistent, that is, in a usable manner. Certainly if one

10 wants to take the 300 hours, it's possible, though wouldn't

11 one not then just go down to the store and spend $20.

12 The other point I would draw the Court's attention to

13 is the existence of compact disk technology, meaning musical

14 technology is also digital technology. Currently, it is very

15 simple to duplicate compact disk technology. However, there

16 is not massive widespread harm right now. The companies are

17 continuing to function properly, and while certainly piracy is

18 a problem in its large-scale capacities, often in other

19 countries, there are criminal laws that deal with that. And

20 to put forward that this speech that is being posted is what

21 will cause a landslide or barrage of additional piracy issues

22 is, I submit to the Court, simply inaccurate, or, as the Court

23 put it, hyperbole.

24 And with that, your Honor, I would turn it over to Mr.

25 Katz if he has any additional points to make.



54



1 MR. KATZ: No, your Honor.

2 THE COURT: Okay. Thank you.

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

4 address.

5 MR. GOLD: Your Honor, until several weeks ago, we

6 did not believe that we needed to come to court in order to

7 protect our rights. One of the problems with doing that in

8 the hacker community is that if you challenge them a little,

9 you really turn them on, and that was a major consideration

10 for us. And things seemed to be going to the point where

11 these DeCSS postings were substantially diminishing. But

12 after California, we have no option, and we formed the belief

13 within a week after the publicity of that decision on the TRO

14 that we better come or we're going to lose our interest in

15 this encryption device, and we're turning to the last

16 protection that we relied on to safeguard the value of our

17 copyrighted material, and that is the Court's enforcement of

18 the existing statute.

19 People are violating it. They're madly going about trying

20 to get people to mirror it so that the number of suits that

21 we'll have to bring to bring this under control will increase,

22 in the hope that it will turn us off and destroy this system.

23 But it won't turn us off and we're going to pursue it in every

24 place that it comes up because of our enormous investment in

25 it and the investment of our public in those players. We



55



1 didn't think we had to do this and we didn't want to do it,

2 but we've got to do it now after what happened in California.

3 We believe that if the Court enforces this, it will

4 substantially stop in the United States. People, most people,

5 don't like to violate the law, if they see the courts are

6 taking it seriously and are going to enforce it. These are

7 sophisticated people who are doing this. And we honestly

8 believe that we still, this week, have a viable protective

9 device, and we don't think we're going to have it very much

10 longer if the courts won't enforce the law.

11 THE COURT: All right. Thank you.

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

13 very briefly.

14 THE COURT: Very briefly.

15 MR. LEVY: Okay. I'll have Ms. Gross do the first

16 point.

17 MS. GROSS: I just wanted to refer back to the DMCA

18 and the code section that we're talking about. 1201(a)(2) and

19 I apologize for referring to the incorrect section before, but

20 I've got the correct one in front of me now, but I think it's

21 important to note that (A), big letter (A), capital letter

22 (A), of that particular code section says it needs to be

23 "primarily designed or produced for the purpose of

24 circumventing a technological measure." And I would submit to

25 the Court that if we had an opportunity to develop the facts



56



1 and to present the Court with an adequate record to make its

2 determination, that the primary purpose of this software is to

3 play DVDs and not to copy --

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

5 MS. GROSS: Okay.

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

7 MS. GROSS: Because it's not covered under (2)(A)

8 then.

9 THE COURT: You said it, but I don't see why that

10 follows at all.

11 MS. GROSS: Because it's not primarily designed for

12 the purpose of circumventing the technological measure that

13 controls --

14 THE COURT: Of course it is. The whole point here is

15 that CSS is designed to protect against even the playing of a

16 copyrighted DVD except with a player using a licensed CSS key.

17 And if you go ahead and put out DeCSS for the purpose of

18 playing it without using a player with the licensed

19 technology, you have done it primarily for the purpose of

20 circumventing the measure. Isn't that true?

21 MS. GROSS: I think that you've exactly hit on the

22 point here, but I think that I want to disagree with you in

23 this broad interpretation of the statute. I don't believe

24 Congress intended to give copyright holders the right to

25 decide which players would be acceptable for playing their



57



1 works. In fact, I don't think Congress has the power to give

2 copyright holders that degree of control on what machines

3 their work can be played.

4 MR. LEVY: In essence, your Honor, that broader

5 reading, which I understand how the Court was reading it,

6 would mean that licensed players run afoul of the DMCA, and

7 certainly that's not Congress' intent. That is to say, if it

8 really is the case that any decryption is unlawful under DMCA,

9 then licensed decryption is also impermissible and that, of

10 course, one would hope, is not Congress' intent.

11 MR. HART: Your Honor, may we --

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

13 THE COURT: But the problem, of course, is that the

14 phrase "circumvent a technological measure" is defined to mean

15 any decryption without the authority of the copyright owner.

16 So the statute seems to say on its face precisely what you say

17 Congress can't have meant.

18 MS. GROSS: Congress has limitations in what it can

19 do under the law, and I don't think that Congress intended to

20 give copyright holders the power to say your work can play on

21 this device, that device, but not these other devices. I

22 think that really needs far more research and far more filling

23 out the record on that.

24 Hello? Hello?

25 THE COURT: There's something wrong with your



58



1 connection, counsel.

2 MS. GROSS: Hello?

3 THE COURT: All right. I think I need to give Carol

4 a break here. She's been working very hard. We'll recess for

5 ten minutes. You, Mr. Katz, can try to reach your folks in

6 California and get them plugged back in, and we'll reconvene

7 at 25 to five and I'm going to give you a decision.

8 (Recess)

9 THE COURT: Are you back, Ms. Gross?

10 MS. GROSS: Okay.

11 THE COURT: Mr. Levy?

12 MR. LEVY: Yes, this is Allonn Levy.

13 THE COURT: Fine. I am prepared to give you a

14 decision now. Although given the nature of the case, I intend

15 to file a written opinion in due course, I am persuaded that

16 it is important that I rule immediately in all the

17 circumstances, so I am going to make a summary statement of my

18 reasoning, but I expect to elaborate on it as promptly as I

19 can.

20 I should begin by clarifying the record that is before me

21 and the manner in which we came to this point. The plaintiffs

22 filed this action, if memory serves, on January 14. Is that

23 right? And I signed an order to show cause on that date

24 bringing on this motion for a preliminary injunction,

25 initially for 11:00 this morning. The order required prompt



59



1 service, which was made, and it required the filing of any

2 affidavits or other answering papers on behalf of the

3 defendants earlier this week.

4 On Wednesday, if memory serves, I received an answering

5 memorandum from the defendants but no affidavits. I also

6 received a request for an adjournment, which was opposed by

7 the plaintiffs. I held a conference call on the record on

8 Wednesday with respect to the application for an adjournment.

9 The defendants' position was that they were not prepared to

10 consent to any interim relief in exchange for the adjournment

11 they requested. The plaintiffs' position was that they were

12 not prepared to grant the adjournment in view of what they

13 conceived to be the threatened harm to their clients, absent

14 interim relief, and so I denied the adjournment except to the

15 extent that I moved the hearing until 2:30 this afternoon to

16 accommodate the defendants' counsel.

17 On Wednesday, the defendants indicated to me also that

18 they were in the process of preparing one or more affidavits

19 and stated that they intended to file them before the hearing.

20 They did not do so. In consequence, the record before the

21 Court consists of plaintiffs' moving papers, the defendants'

22 answering memorandum, but no evidentiary submission by the

23 defendants whatsoever, and reply papers submitted today by the

24 plaintiffs.

25 During the course of the proceedings, both in the



60



1 defendants' memorandum of law and in the course of assertions

2 of counsel this afternoon, a great many factual contentions

3 and assertions have been advanced. They include such

4 assertions as the contention that Mr. Kazan is an Internet

5 service provider and that Krackdown is a website run by a

6 press organization, but there are a great many others. None

7 of those assertions is supported by any evidence whatsoever.

8 The evidence before me is that submitted by the plaintiffs,

9 and it is on the basis of the evidence before me that I am

10 obliged to rule.

11 Coming to the matter before me, the technology, at

12 least at the level that it need be understood for this

13 purpose, is pretty simple. The plaintiffs record copyrighted

14 motion pictures on DVDs, which is an acronym for, I think,

15 digital versatile disks. DVDs with these movies are data

16 files that may be transformed into audio and video by

17 appropriate computer equipment. In order to prevent

18 unauthorized copying, the plaintiffs employ something called

19 Contents Scramble System, or CSS, which is an encryption-based

20 computer and authentication system that requires the use of

21 appropriately configured hardware, such as a DVD player or a

22 computer DVD drive, to decrypt, unscramble, and play back

23 motion pictures on DVDs without enabling the user to make a

24 digital copy of the DVD movie.

25 In late October of 1999, computer hackers apparently



61



1 cracked the DVD encryption system used by the plaintiffs and

2 began offering on the Internet a software utility called DeCSS

3 that enables users to break the CSS copyright protection

4 system and thereby not only play, but copy and distribute,

5 digital copies of copyrighted DVD movies.

6 The plaintiffs initially responded by remonstrating

7 Internet service providers on which sites engaged in this

8 activity were located. In some substantial number of cases,

9 the offending materials were removed. As 1999 drew to a

10 close, someone, not the plaintiffs, brought a trade secret

11 action relating to this technology in a state court in

12 California and moved for a temporary restraining order and a

13 preliminary injunction. The state court judge denied the TRO,

14 I gather without explanation. The preliminary injunction

15 motion, I am informed, was heard this week and has not been

16 decided.

17 The commencement of the action in California, and

18 particularly the denial of the TRO, led to a substantial

19 increase in attempts to disseminate DeCSS on the Internet.

20 From some of the evidence submitted by the plaintiffs, it

21 appears clear that there are those in the hacker community and

22 in the Internet community, more broadly, who took the

23 litigation in California as a throwing down of the gauntlet.

24 There appears, although it is not necessary to my decision, to

25 have been an obvious effort in at least some quarters to



62



1 disseminate DeCSS as broadly and as quickly as possible to

2 make it difficult or impossible to put the genie back in the

3 bottle through legal means.

4 If there is such an effort, and there appears to be, the

5 defendants appear to be part of it. According to plaintiffs'

6 evidence, it appears that Mr. Reimerdes is the author and

7 proprietor of a website that is disseminating DeCSS.

8 Mr. Kazan is listed as the technical director for a second

9 website which is so engaged, although plaintiffs inform me

10 that he seems to have taken DeCSS down off the website since

11 the commencement of this action.

12 I note in that connection that that does not moot the

13 claim against him. The W.T. Grant case in the Supreme Court

14 makes clear that the voluntary cessation of such conduct does

15 not moot an application for an injunction.

16 The defendant Corley, under the pseudonym Emmanuel

17 Goldstein, is listed as the administrative, billing, and

18 technical contact of the third such site.

19 The defendants argue that they are not the real parties in

20 interest, but the argument is both misguided and beside the

21 point. It is misguided because Rule 17 requires that actions

22 be prosecuted in the name of the real party in interest. It

23 does not speak to defendants. It is beside the point because

24 the issue here is not whether these three individuals are or

25 are not real parties in interest in the sense they use the



63



1 term or whether they are the proprietors or the moving forces

2 behind the websites in question. Rather, it is whether the

3 plaintiffs are likely to show that they are engaged in

4 violating the Act. If they are, they may be subject to

5 injunction. If they are not, they, of course, would not be.

6 They all had the opportunity to submit affidavits

7 indicating they had nothing to do with these activities or

8 explaining the nature of their conduct and why it is not

9 covered. They elected not to do that. I draw the inference

10 from the materials submitted by the plaintiffs and from

11 defendants' silence that they are engaged in the offending

12 activities. That, of course, is a matter that they are free

13 to contest at trial. But for present purposes, that is my

14 finding.

15 The objectives of the websites with which they are

16 connected are reasonably clear. The site with which Mr.

17 Reimerdes is connected invites users to share their DVDs with

18 the world by copying them and, as I mentioned during the

19 course of argument, it contains a notice reading, and I quote:

20 "The DVD Copy Control Association are cocksuckers."

21 The site with which Mr. Kazan is connected makes it

22 fairly clear from materials plaintiffs have submitted that it

23 is engaged in something approaching a vendetta against the

24 plaintiffs in this case. It inveighs against the plaintiffs'

25 efforts to prevent unauthorized copying of their material and



64



1 makes clear its belief that it has a right to decrypt the

2 plaintiffs' products and disseminate.

3 The standard that governs the availability of

4 preliminary injunctions in this circuit is very well

5 established. The movant has to demonstrate a threat of

6 irreparable injury and either a likelihood of success on the

7 merits or the existence of serious questions that are fair

8 ground for litigation and a balance of hardships tipping

9 decidedly in its favor.

10 In this case, it is clear to me that there is a threat of

11 irreparable injury. To begin with, it is very well

12 established in intellectual property cases that threatened

13 infringement of copyright, trademark, or patent rights or

14 violation of trade secret rights is presumptively irreparable

15 injury. I made the point forcefully with defendants' counsel

16 that defendants are not here charged with copyright

17 infringement. That is true. As a technical matter,

18 therefore, the presumption to the point that it has developed

19 up to now does not apply. Nonetheless, it is plain that the

20 dissemination of software that would circumvent the copyright

21 protection on the plaintiffs' copyrighted works does involve a

22 substantial and immediate threat of irreparable injury, and

23 that requirement is satisfied.

24 I have taken into account the line of cases in this

25 circuit that has indicated that in some circumstances undue



65



1 delay in seeking a preliminary injunction may either defeat a

2 presumption of irreparable injury or, at a minimum, undermine

3 the plaintiffs' claim to irreparable injury. The cases make

4 clear, however, that undue delay exists where the delay in

5 fact is unexplained and unjustified. It does not exist where

6 a party is unaware at the outset of the scope of the threat.

7 It does not exist where the party pursues in a reasonable

8 fashion and with reasonable dispatch other means of attempting

9 to remedy the problem without coming to court. There are

10 other circumstances that are relevant.

11 I find that there was no undue delay in this case. The

12 plaintiffs acted reasonably in seeking to deal with this

13 problem by first approaching the ISPs. They met with some

14 success. They were not aware then that the problem would be

15 as widespread as it has become. I accept that the problem has

16 become much more widespread since late December and that their

17 getting into court by January 14 was plenty fast enough.

18 That brings us to an evaluation of the plaintiffs'

19 likelihood of success on the merits. The plaintiffs are

20 proceeding under Section 1201(a)(2) of the Copyright Act. In

21 relevant part, it prohibits any person from offering to the

22 public or providing any technology, product, service, device,

23 or component "that is primarily designed or produced for the

24 purpose of circumventing a technological measure that

25 effectively controls access to a work protected under" the



66



1 Act, or that "has only limited commercially significant

2 purpose or use other than to circumvent a technological

3 measure that effectively controls access to a work protected

4 under" the Act.

5 "To circumvent a technological measure" is defined in

6 the statute to mean descrambling a scrambled work, decrypting

7 an encrypted work, "or otherwise to avoid, bypass, remove,

8 deactivate, or impair a technological measure, without the

9 authority of the copyright owner."

10 "A technological measure effectively controls access to a

11 work," according to the definition in the Act, "if the

12 measure, in the ordinary course of its operation, requires the

13 application of information, or a process or a treatment, with

14 the authority of the copyright owner, to gain access to the

15 work."

16 There is, in my view, not the slightest question that

17 plaintiffs have an exceptionally high likelihood of prevailing

18 on the merits of the claim of violation of this Act by these

19 defendants unless one of the statutory exceptions, which I

20 will come to in a moment, is satisfied, or there is a

21 constitutional impediment to that conclusion. CSS effectively

22 controls access to the copyrighted works because, as the

23 defendants conceded at page 3 of their memorandum, one cannot,

24 in the ordinary course, gain access to the copyrighted works

25 on DVDs without applying information or a process inherent in



67



1 the player key that permits the play back of the DVD. Indeed,

2 it appears also that one cannot copy the copyrighted works

3 protected by CSS even with a player key.

4 It is undisputed that DeCSS decrypts encrypted works

5 and otherwise avoids or bypasses CSS without the authority of

6 the copyright owners. It is also clear to me that plaintiffs

7 are likely to establish that DeCSS is primarily designed or

8 produced for the purpose of circumventing CSS and, thus, falls

9 within Section 1201(a)(2)(A), and also that it has only

10 limited commercially significant purpose or use other than to

11 circumvent CSS and, thus, falls within 1201(a)(2)(B).

12 The defendants made the argument here this afternoon

13 that DeCSS was not primarily designed to circumvent CSS

14 because it was meant only to enable people in lawful

15 possession of copyrighted disks to play them for their own use

16 on Linux machines. A Linux machine is a computer that is

17 operating under the Linux operating system rather than under

18 Windows, the much more widely disseminated operating system.

19 On the relative positions of the two, anyone interested might

20 read the decision in the Microsoft case. But the simple fact

21 of it is that the argument fails for two reasons.

22 First of all, defendants have submitted no evidence

23 whatsoever that the primary purpose of DeCSS was to enable

24 people in lawful possession of copyrighted DVDs to play them

25 on Linux machines and not to copy them. Secondly, even if



68



1 there were proof to that effect, there is no doubt that DeCSS

2 was primarily designed or produced for the purpose prohibited

3 in 1201(a)(2)(A) because the definition of "circumvent a

4 technological measure" in 1201(a)(3) makes clear that

5 decrypting or descrambling a copyrighted work without the

6 authority of the copyright owner is the very definition of

7 circumventing a technological measure. Therefore, even if the

8 primary purpose here were to enable lawful possessors of

9 copyrighted DVDs simply to play those DVDs on Linux machines,

10 the primary purpose would have been within the statute. I

11 need not ultimately decide the case on that ground because

12 there are ample alternative bases that I already have

13 outlined.

14 In summary, on that point, absent a statutory

15 exception or a constitutional impediment, there is here a

16 crystal clear violation of the statute.

17 The defendants have argued almost every conceivable

18 exception found either in 1201 or in other parts of the

19 Copyright Act, and they are all arguments that I find

20 unpersuasive. We start with Section 512(c) of the Copyright

21 Act which provides limited protection from liability for

22 copyright infringement by certain service providers for

23 information resident on a system or network owned or

24 controlled by them. I think that argument is made under

25 512(c) only with respect to Mr. Kazan. But it does not matter



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1 because the grounds that require its rejection in his case

2 require its rejection in the case of all of them.

3 First of all, there is no proof before the Court that

4 any of the defendants is a service provider within the meaning

5 of 512(c). Second, even if they were all service providers,

6 what 512(c) does is to provide liability protection from

7 copyright infringement. These defendants are sued under

8 1201(a)(2) and are sought to be held liable not for copyright

9 infringement but for a separate statutory violation. Section

10 512(c), whether or not they are service providers, is simply

11 of no applicability to this case.

12 The next argument turns on the reverse engineering

13 exception, Section 1201(f)(2), or, more broadly, 1201(f).

14 1201(f)(2) provides that, notwithstanding Section 1201(a)(2),

15 a person who has lawfully obtained the right to use a copy of

16 a computer program may develop technological means to

17 circumvent a technological measure, or the protection afforded

18 by that measure, to identify and analyze the elements of the

19 program, that is to say, the program which the individual in

20 question has obtained the right to use, necessary to achieve

21 interoperability with an independently created computer

22 program, or for the purpose of enabling interoperability if

23 those means are necessary to achieve interoperability but only

24 to the extent that doing so does not infringe copyright.

25 1201(a)(3) permits limited rights to make such information



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1 available.

2 The defendants argue that they fall within this exception

3 because DeCSS is necessary to achieve inoperability between

4 computers running on the Linux system rather than Windows and

5 DVDs. I reject the argument. First, there isn't any evidence

6 in the record to support the assertion. Second, DeCSS

7 concededly runs under Windows, even assuming it runs under

8 Linux. And, third, as the plaintiffs have pointed out, the

9 legislative history makes abundantly clear that Section

10 1201(f) permits reverse engineering only of computer programs.

11 It does not authorize the circumvention of technological

12 protection that controls access to other works such as movies.

13 The next exemption or exception on which the

14 defendants rely is Section 1201(g), which relates to

15 encryption research. There is no showing that the defendants

16 are engaged in that research, but I need not rely on that

17 point. In order to avail oneself of the exemption under

18 1201(g), the defendant must demonstrate that he made a good

19 faith effort to obtain authorization before circumventing the

20 technological means. There is no such showing here.

21 The next argument is that this was authorized or

22 exempt security testing under Section 1201(j). That exemption

23 is limited to the good faith testing of computers, computer

24 systems, or computer networks, with the authorization of the

25 owner of the equipment or the network. In this case, DeCSS



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1 has nothing to do with testing computers, computer systems, or

2 networks, and what is going on here certainly was not done

3 with the authorization of the owners.

4 We next have the argument that the defendants are

5 engaged in a fair use under Section 107 of the Copyright Act.

6 Section 107 of the Copyright Act affords a limited defense to

7 liability for copyright infringement. For the same reasons

8 that I pointed out earlier -- these defendants are not being

9 sued for copyright infringement -- the fair use defense has no

10 application in the facts of this case. Thus, no colorable

11 defense under the Copyright Act has been advanced.

12 The defendants next argue that the First Amendment

13 protects their activities. They argue that their

14 dissemination of DeCSS is protected by the First Amendment and

15 that, moreover, injunctive relief here would run afoul of the

16 prior restraint doctrine.

17 I have some question in my mind whether DeCSS, the

18 only portion of which that is offensive to the plaintiffs

19 consists of executable instructions as distinguished from

20 nonexecutable programmer comments, is protected speech under

21 the First Amendment. But for the purposes of this decision, I

22 assume that it is. To say that it is, however, is only the

23 beginning of the analysis.

24 Professor Nimmer, in his famous treatise on

25 copyright, points out that if one took the most extreme



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1 absolutist First Amendment and statutory construction approach

2 to the provisions of the Constitution relevant here, the law

3 of copyright is unconstitutional in its entirety. The

4 reasoning would be that all expressions are speech.

5 The First Amendment says Congress shall make no law

6 abridging freedom of speech or of the press. The First

7 Amendment was adopted after Article I of the Constitution.

8 Under normal precepts of statutory construction, a later

9 amendment modifies an earlier text. All copyright law

10 impinges on freedom of expression because any time one

11 plagiarizes a book or a play or a movie or a copyrighted

12 newspaper article, one is, after all, speaking and expressing

13 oneself and, therefore, it would follow that the law of

14 copyright is unconstitutional and that no copyright protection

15 would exist for anyone in anything.

16 I hasten to add that Professor Nimmer does not take the

17 view that the law of copyright on which he and his son have

18 both spent their lives is unconstitutional. I am not sure

19 that the Supreme Court has ever directly addressed that

20 precise argument, but the question was raised indirectly in

21 the Gerald Ford memoirs case, Harper & Row v. Nation

22 Enterprises, 471 U.S. 539, where the alleged infringer was

23 charged with copyright infringement for printing the juiciest

24 part of President Ford's copyrighted memoirs, allegedly in

25 violation of the publisher's copyright. The defense was,



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1 among other things, fair use, and the argument was made that

2 the fair use defense in that case had to be given a very

3 expansive reading to take account of the First Amendment

4 interest in President Ford's memoirs, particularly, as I

5 recall, his account of how President Nixon came to be pardoned

6 for Watergate.

7 The Supreme Court made clear that conventional fair use

8 analysis would be applied and that it would not expand the

9 boundaries of the traditional fair use defense in light of the

10 First Amendment argument advanced by the defendant. In the

11 course of doing so, it made it perfectly clear that copyright

12 and the First Amendment coexist.

13 That is not to say there is never any tension. And it is

14 not to say that there is any crystal clear reconciliation of

15 whatever tension there is. There are a number of possible

16 approaches.

17 One that strikes me as quite relevant here, particularly

18 in light of the Betamax case, which I will come to in a

19 minute, is this: The copyright clause of the Constitution,

20 Article I, Section 8, empowers Congress to secure, for limited

21 times, to authors the exclusive right to their writings. It,

22 thus, empowers Congress to adopt the Copyright Act and to

23 confer upon the owners of copyrights the exclusive right to

24 exploit those works for a limited period. Article I concludes

25 by empowering Congress to make all laws which shall be



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1 necessary and proper for carrying into execution the foregoing

2 powers. In order to give authors the exclusive right to

3 exploit their copyrighted writings -- and I should make clear

4 that the word "writings" in this context is a generic term

5 that embraces all copyrighted works -- Congress necessarily

6 was given the power to prevent others from publishing those

7 writings as long as the copyright subsisted, even though doing

8 so necessarily prevents some people from saying some things

9 some of the time; namely, things that are copyrighted by

10 others.

11 In consequence, the First Amendment cannot be read as

12 abrogating the copyright clause and the necessary and proper

13 clause. Congress quite plainly has the power to limit speech

14 where doing so is appropriate to ensure that copyright owners

15 enjoy the exclusive right to exploit their works. Chief

16 Justice Marshall, almost 200 years ago, said with respect to

17 the necessary and proper clause "let the end be legitimate,

18 let it be within the scope of the Constitution, and all means

19 which are appropriate, which are plainly adapted to that end,

20 which are not prohibited but consistent with the letter and

21 spirit of the Constitution, are constitutional." McCulloch v.

22 Maryland, 4 Wheaton 316, 420, decided in 1819. That is the

23 law today.

24 The Betamax case makes especially clear that in areas

25 of rapid technological change, such as the one we are dealing



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1 with, the judiciary is to give deference to Congress' judgment

2 about the manner in which copyright is to be protected in a

3 changing technological climate. In that case, Sony Corp. v.

4 Universal City Studios, 464 U.S. 417 decided in 1984, a case

5 that had to do with videotape recorders, the Supreme Court

6 said this, and I do elide some material in this quote for

7 brevity:

8 From its beginning, the law of copyright has developed in

9 response to significant changes in technology. Indeed, it was

10 the invention of a new form of copying equipment -- the

11 printing press -- that gave rise to the original need for

12 copyright protection. Repeatedly, as new developments have

13 occurred in this country, it has been the Congress that has

14 fashioned the new rules that new technology made necessary.

15 The judiciary's reluctance to expand the protections afforded

16 by the copyright without explicit legislative guidance is a

17 recurring theme. Sound policy, as well as history, supports

18 our consistent deference to Congress when major technological

19 innovations alter the market for copyrighted materials.

20 Congress has the constitutional authority and the

21 institutional ability to accommodate fully the varied

22 permutations of competing interests that are inevitably

23 implicated by such new technology.

24 That appears at pages 430 and 431 of 464 of the U.S.

25 Reporter. Now, in that case, the court relied on this



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1 traditional deference to Congress to conclude that, in the

2 absence of legislation, it should not extend copyright

3 protection. But the very same reasoning counsels in this case

4 that in the face of express guidance from Congress,

5 unmistakably clear guidance from Congress, I ought to be

6 exceptionally reluctant to cut back on it. That is not to say

7 that the courts are obliged to blind themselves to

8 constitutional violations. Quite the contrary. But this is a

9 circumstance in which there is an obvious need for

10 accommodation between interests in free speech and interests

11 in protection of copyright.

12 As Congress has chosen a means which is directly related

13 to the protection of important copyright interests, I see no

14 infirmity viewing this from the perspective of the

15 Constitution as a whole, that is, the First Amendment, the

16 copyright laws, and the necessary and proper clause. That is

17 one possible approach to the First Amendment question in this

18 case.

19 Another is a balancing approach in which there would be a

20 balancing between the limitation on expression inherent in

21 protecting a copyright and the values served by protecting the

22 copyright. In this case, I have no doubt about where that

23 balance falls either, assuming that were the appropriate test.

24 The plaintiffs here have enormous investments in copyrighted

25 material, the commercial significance of which is a matter of



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1 broad and obvious public knowledge. The creation of media

2 content is one of the large industries in this country and one

3 of our major exports today. The protection of intellectual

4 property rights in materials owned by Americans is an

5 important feature of our foreign policy and our trade policy.

6 You only have to read the newspapers to know that.

7 On the other side here, we have the interest in

8 expression. I do not for a moment demean that interest; it is

9 an important one. But we always have to ask ourselves what we

10 are really talking about. The facts say a lot. Putting aside

11 programmer comments, nonexecutable programmer comments, which

12 are not the focus of this application, we are dealing with a

13 set or sets of computer instructions. They are, I am prepared

14 to assume, expressive to some degree. They are much closer to

15 an electronic or a mechanical device for performing an

16 operation on a subject to produce a result. They are a set of

17 instructions which cause a computer to render intelligible a

18 data file on a DVD. If I were to balance the interest in

19 protection of copyrights against the extent to which free

20 dissemination of that set of machine-executable instructions

21 serves the goals traditionally served by protection of

22 speech -- an informed society, the ability to engage in

23 self-government, the ability to realize social and

24 intellectual goals -- the balance in my judgment falls on the

25 side of copyright protection, even though I recognize that



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1 there is perhaps some interest served on the defendants' side

2 of the ledger.

3 I do not think I need, for present purposes, to come

4 to a definitive theoretical view on this point. Under any of

5 the approaches that have been brought to my attention, or that

6 I have found on my own, I find the legislation under which

7 plaintiffs seek relief, both on its face and as applied here,

8 constitutional or at least highly likely ultimately to be held

9 constitutional.

10 The final point that plaintiffs make is the argument

11 that an injunction here would be an unlawful prior restraint.

12 It is an argument that is invoked almost as a talisman on the

13 assumption that any and all prior restraints are

14 unconstitutional, short of an immediate and grave threat to

15 national security or something approaching that. I suppose,

16 for popular and even first-year law school purposes, that is

17 not a bad statement. But it is not really entirely accurate.

18 I took a look during our break at Tribe on Constitutional

19 Law, certainly somebody who has had a few more First Amendment

20 cases than I have, and he makes the point that if you look at

21 what the Supreme Court and the federal courts have done rather

22 than some of the rhetoric, the reality is sometimes hard to

23 square with the rhetoric. He says, and I quote from the

24 second edition of his book, at page 1046, "but prior

25 restraints have been approved in the seemingly less momentous



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1 areas of film censorship, commercial advertising, and permit

2 requirements to use public places for expressive activities.

3 The relative importance of the government's interests,

4 therefore, cannot explain the cases." He then goes on to try

5 to come to a doctrinally satisfying reconciliation, which I

6 will not bore you with.

7 He does point out, however, that in the Progressive

8 magazine case, United States v. Progressive, Inc., 467 F.Supp.

9 990, where a magazine attempted to publish an article on how

10 to make a hydrogen bomb, the district court did issue a

11 preliminary injunction. It remained in effect for seven

12 months, and the Supreme Court denied a motion to expedite the

13 appeal. It illustrates the point about the difference between

14 the rhetoric and the reality.

15 Bearing in mind the very weighty interests on the

16 plaintiffs' side of the equation here and the, to me, quite

17 limited, although probably not nonexistent, expressive

18 interests in the machine-executable code, and the lack of time

19 sensitivity of the latter, I conclude that a preliminary

20 injunction in this case is consistent with the prior restraint

21 doctrine and, therefore, the motion is granted. A preliminary

22 injunction will issue.

23 I do bear in mind the defendants' interest in speed here

24 and in avoiding a prolonged duration for the preliminary

25 injunction, and so, within the limits of my schedule, which is



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1 pretty clear at the moment, you can have a trial pretty near

2 whenever you want.

3 So when do you want your trial? I think I'm free to start

4 Tuesday.

5 MR. LEVY: Your Honor, I'm having the problem with

6 being in California. I cannot even speak with the clients to

7 find out what their schedule is like. Certainly I'm not

8 available for trial on Tuesday. I'm not sure as to the other

9 attorneys.

10 THE COURT: Then let's leave it this way. I will act

11 promptly on any application by the plaintiffs to set this case

12 for a trial just as fast as I can reach it. And all you have

13 to do is communicate with my chambers and you'll be on the

14 fastest express train you ever saw because I take this

15 seriously. And you will get as prompt a trial as I can give

16 you, and I think that's very prompt.

17 MR. LEVY: Thank you, your Honor.

18 MR. KATZ: Your Honor, you mentioned the application

19 of the plaintiff. Are you referring --

20 THE COURT: I misspoke. Application of the

21 defendants.

22 MR. KATZ: Thank you, your Honor.

23 THE COURT: I misspoke. I always assume when I see

24 the Proskauer firm that it's here on behalf of some employer

25 being sued for some labor violation. So they're always here



81



1 for defendants.

2 I have taken the order to show cause and translated it

3 into a preliminary injunction. I have copies that you folks

4 can take a look at. And if there are any problems about the

5 form of it, I'll hear them now. I realize you folks are in

6 California and have a problem with that, but, Mr. Katz will

7 hold up your end.

8 MR. KATZ: Your Honor, I've completed my reading of

9 the document.

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

11 form?

12 MR. GOLD: Your Honor, we got a little smarter in the

13 extra time between the end of last week and the end of this

14 and were hoping that we could get an injunction against

15 linking to DeCSS or posting or linking to any other

16 circumvention device. Again, the posting is you stay on this

17 one website and you take down DeCSS. The link is that you

18 click your mouse twice, you get to another website, which has

19 DeCSS on the page you're transferred to, and you get it. So

20 the only difference is instead of clicking twice, you have to

21 click twice, wait a second, and click twice again. And that's

22 the linking to another circumvention device. One of the

23 defendants is engaged in both.

24 MR. KATZ: Your Honor, if I may be heard on that, the

25 danger in doing so is linking to sites -- let me restate that,



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1 not knowing what's on the other end of a website. If you have

2 a link that goes to a website and you're not necessarily

3 posting that site and you double click, you are at the mercy

4 of whatever may be on the other side of that.

5 THE COURT: Suppose it were "knowingly linking."

6 MR. BAUMGARTEN: Your Honor, our application does not

7 refer to linking to the site. It refers to linking to

8 circumvention devices. We're aware of the concern.

9 THE COURT: What about that?

10 MR. KATZ: Your Honor, my concern is, one, for all

11 sites, but I'm concerned primarily about the media aspects of

12 this in that there may be reporting of the DeCSS, which

13 certainly would be permitted under your ruling, but --

14 THE COURT: Don't let my silence reflect

15 acquiescence. I'm not quite sure what you mean, but I'll hear

16 you out.

17 MR. KATZ: Thank you. In that there may be a

18 reference to a particular site that may or may not have the

19 DeCSS on it. If there is a direct link coming from the site,

20 I think that needs to be distinguished from the actual posting

21 of DeCSS.

22 MR. LEVY: Additionally, your Honor, I think that the

23 linking issue involves a completely separate issue, a whole

24 slew of other problems, and there's been no notice to the

25 defendants that this was what was going to be discussed. It's



83



1 completely separate. Simply drawing a quick suggestion, it

2 would mean, as discussed in argument, that one cannot link to

3 the San Pedro Mercury News because it does have a link to

4 DeCSS.

5 MS. GROSS: Additionally, I think it's important to

6 note that, once you link to something, you have no control

7 over what that person puts in that file.

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

9 Mr. Baumgarten.

10 MR. BAUMGARTEN: Your Honor, I simply want to point

11 out that the language in the statute and the language in the

12 order you prepared covers "providing," and Mr. Gold pointed

13 out it's just four clicks instead of two and you're still

14 getting the material. This is not the copyright issue of

15 whether linking is a performance or a display. This is the

16 language of this statute.

17 THE COURT: If I understand what you're saying, at

18 least one of the defendants has on his site a place where you

19 double click on an icon or a hypertext link and that does not

20 of itself download the DeCSS to your computer; what it does is

21 it puts you onto another site.

22 MR. BAUMGARTEN: For that material.

23 THE COURT: Where you then have to double click

24 again.

25 MR. BAUMGARTEN: Yes, your Honor.



84



1 MR. GOLD: Yes, it's a page with --

2 MR. BAUMGARTEN: But on that page, you don't have the

3 page for the other site and scroll through. Our order is

4 limited to going directly to the offensive material. To us,

5 it makes little difference whether you're providing it with

6 the first set of clicks or the second. You're still providing

7 it and the language of the statute is "providing."

8 MR. LEVY: Your Honor, providing a whole host of

9 other information on the site.

10 THE COURT: Mr. Levy, just hold on a minute. Is this

11 hypothetical link page one on which, in your contemplation,

12 the user simply double clicks anywhere on the page and

13 automatically does it download, or is it a link page on which

14 there's a bunch of stuff and if you click on the right

15 hypertext link on that page you get the download because

16 they're offering the download to everybody?

17 MR. BAUMGARTEN: Your Honor, for the purposes of the

18 preliminary injunction, I think we'd be satisfied to make it

19 clear that you're clicking on the icon or whatever is there or

20 the word "DeCSS," as long as what you're downloading to the

21 second click is DeCSS. Anything else on the page is not

22 within our contemplation. We view it essentially the same as

23 posting the DeCSS. We don't mean to expand it. If there was

24 a newspaper article on the link to site the order would not

25 enjoin linking to the newspaper article.



85



1 THE COURT: I think that that issue is sufficiently

2 different from what I've heard that I'm not prepared to rule

3 on it now. I will deal with this in the form, if you wish to

4 press it, of an application to modify and we'll give the

5 defendants an opportunity to respond to it and we'll deal with

6 it in a more measured way.

7 MR. BAUMGARTEN: Thank you, your Honor.

8 MR. KATZ: Your Honor, with respect to that, however,

9 by looking at the preliminary injunction order, 2(b), as your

10 Honor points out, we deal with the issue of posting, but I'm

11 concerned about the language "or in any other way

12 manufacturing importing, or offering to the public," and it's

13 the "importing," Judge, I'm concerned about in the language of

14 what a link is.

15 THE COURT: That's the statutory language.

16 MR. KATZ: I understand that, your Honor. But it

17 just runs counter to what counsel has just said in terms of

18 what they're willing to accept, posting versus linking.

19 THE COURT: Look, I don't see the problem about

20 importing. And I do not now offer any view as to what the

21 phrase "offering to the public" means, or what the word

22 "providing" means. I'm not going to give an advisory opinion

23 on that. This is the statutory language. Your people at the

24 moment obviously are offering to the public and providing. If

25 some close case gets presented later on, I'll deal with it.



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1 MR. BAUMGARTEN: Thank you.

2 THE COURT: Anything else about the form of the

3 order?

4 MR. GOLD: No, your Honor.

5 MR. KATZ: No, your Honor.

6 THE COURT: All right. The order is signed at 5:40

7 p.m. My law clerks will give each side one copy of it and we

8 will docket the order. I reserve the right just to edit for

9 syntax this transcript. It probably won't be available to you

10 until Monday, at best, before trial.

11 MR. KATZ: Your Honor, if I may just point out for

12 clarification, affidavits or declarations of the defendants

13 had been submitted to your Honor.

14 THE COURT: Where?

15 MR. KATZ: In the form of, if I'm not mistaken, in

16 the reply brief. They had been sent over to counsel, and

17 those are contained --

18 THE COURT: The reply brief was filed by the

19 plaintiffs.

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

21 Honor.

22 THE COURT: Yes. You didn't submit any.

23 MR. KATZ: I had been unable to obtain them and bring

24 them down to court in time, and I sent them over to counsel

25 and I believe that they are included -- I believe that they



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1 are included.

2 THE COURT: They're included where?

3 MR. KATZ: I believe I saw them in the facsimile that

4 was sent over, the three affidavits.

5 THE COURT: Who are the affiants?

6 MR. KATZ: Roman Kazan --

7 MR. KAZAN: I have a copy of it.

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

9 THE COURT: They were never sent to me, as far as I

10 know. They were not filed with the Court, were they?

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

12 this morning.

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

14 MR. KATZ: I understand that.

15 MR. HART: Your Honor, I called Mr. Katz to ask him

16 about it, and by the time he tracked down the fax that was

17 supposed to have gotten to our office, we had already replied

18 blindly and without the sworn testimony. I did indeed get a

19 fax from him after that and brought it on my way to court.

20 But Mr. Gold has not even had a chance to see it.

21 MR. KATZ: And, your Honor, that was based on the

22 transmission I had received from the individual defendants.

23 THE COURT: Look, obviously it's unfortunate that

24 that happened. But, counsel, you all knew what the rules

25 were. And there's nothing unusual about a preliminary



88



1 injunction being heard this way. It happens every day of the

2 week. And it's been going on the entire 30 years I've been in

3 this business in New York and it's probably going to go on a

4 lot longer after I'm gone. I mean an affidavit is good only

5 if you put it before the Court.

6 MR. KATZ: Understood, your Honor.

7 THE COURT: Anything else?

8 MR. GOLD: No, your Honor.

9 THE COURT: I thank counsel. This was illuminating

10 to say the least.

11 o0o