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DVD Copy Control Association v. Andrew Bunner

Reversing the court below, the California Court of Appeal denied plaintiff's application for a preliminary injunction, by which plaintiff sought to enjoin defendant Andrew Bunner and others from publishing on web sites the computer program DeCSS. DeCSS permits a user to evade the "content scramble system" which both encrypts DVDs and is designed to prevent their unauthorized use and duplication. Plaintiff claimed that it was entitled to such relief under California's Uniform Trade Secret Act, Civil Code Section 3426.1, et seq. The court rejected plaintiff's application on the grounds that such an injunction was an impermissible prior restraint on speech which ran afoul of the First Amendment. This decision was premised on the court's determination that defendant's publication on a web site of the source code of the DeCSS program was a form of speech subject to First Amendment protection.

Motion pictures stored on DVDs are protected from unauthorized use by means of encryption using a "content scramble system" or CSS. CSS is designed to restrict the playback of an encrypted DVD to a CSS-equipped DVD player or drive, which is capable of decrypting the DVD.

Plaintiff DVD Copy Control Association ("DVDCCA") is a trade association which controls the rights to the CSS decryption technology.

In October 1999, the DeCSS computer program was posted on the Internet, allegedly by Jon Johansen, a 15 year old resident of Norway. DeCSS consists of computer source code which permits the playing of an encrypted DVD on a non-CSS equipped DVD player or drive. Defendant Andrew Bunner published the DeCSS source code on his web site.

Claiming that DeCSS "embodies, uses and/or is a substantial derivation of DVDCCA's confidential proprietary information" DVDCCA commenced this action under California's Uniform Trade Secrets Act, Civil Code Section 3426.1, et seq. ("UTSA"), seeking to enjoin Bunner from continuing to publish the DeCSS on his web site. More particularly, DVDCCA claimed that DeCSS accomplished its goal, in part, by using a CSS "master key", which key constituted a trade secret of DVDCCA and permitted the decryption of an encrypted DVD. The trial court agreed, and issued a preliminary injunction, enjoining defendant Bunner and others from continuing to publish DeCSS on their web sites. The Court of Appeal reversed, holding that such injunction was an impermissible prior restraint on speech that violated the First Amendment.

Under the California Uniform Trade Secret Act, a trade secret is misappropriated if a person "discloses or uses a trade secret the person knew or should have known was derived by another who had acquired it by improper means or who had a nondisclosure obligation." "Improper means" is defined in the Act to include "theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy or espionage through electronic or other means." Under the Act, "reverse engineering" is not an "improper means" of acquiring information. The UTSA permits the court to award injunctive relief to prevent an actual or threatened misappropriation of a trade secret.

DVDCCA alleged that defendant Bunner violated the UTSA by posting DeCSS, which he knew or should have known contained trade secret information acquired by Johansen by "improper means" as defined in the Act. DVDCCA argued that DeCSS contained a CSS master key that DVDCCA had licensed to Xing Technology Corporation, who in turn only licensed software containing the key to those who agreed in a click wrap agreement not to reverse engineer the same. DVDCCA further alleged that Johansen obtained the key by reverse engineering Xing software in violation of this license agreement, which constituted acquiring a trade secret by improper means. DVDCCA finally alleged that defendant Bunner had reason to know both that DeCSS contained the master key, and that that key had been obtained by improper means.

Assuming without deciding that the trial court had correctly determined that the DVDCCA had demonstrated a "reasonable probability" that is could establish these claims and a violation of the UTSA, the Court of Appeals nonetheless refused to issue plaintiff the requested relief.

Relying on the Sixth Circuit's decision in Junger v. Daley, 209 F.3d 481 (6th Cir. 2000), the court held that DeCSS and the source code comprising it is speech entitled to First Amendment protection. Said the court:

Like the CSS decryption software, DeCSS is a writing composed of computer source code which describes an alternative method of decrypting CSS encrypted DVDs. Regardless of who authored the program, DeCSS is a written expression of the author's ideas and information about decryption of DVDs without CSS. … Thus, we conclude that the trial court's preliminary injunction barring Bunner from disclosing DeCSS can fairly be characterized as a prohibition of "pure" speech.

The DeCSS did not represent speech of the type that falls outside of the protection of the First Amendment. As noted by the court, obscenity, libel and "fighting words" are types of speech that fall outside of the scope of the First Amendment because they lack any social value. However, said the court:

DeCSS does not fall into any of these established exceptions: it is not lewd, profane, obscene or libelous, nor did it involve any fighting words. DVDCCA does not ask this court to create a new judicial exception for software containing a misappropriated trade secret, and we decline to do so here. Although the social value of DeCSS may be questionable, it is nonetheless pure speech.

An injunction prohibiting defendant from publishing DeCSS on his web site is a prior restraint on speech. "Prior restraints on pure speech are highly disfavored and presumptively unconstitutional. … It is clear that few things, save grave national security concerns, are sufficient to override First Amendment interests." Finding no such interest present here, the Court held that the issuance of a preliminary injunction would be an impermissible violation of the defendant's First Amendment rights. Said the court:

DVDCCA's statutory right to protect its economically valuable trade secret is not an interest that is "more fundamental" than the First Amendment right to freedom of speech or even on equal footing with the national security interests and other vital governmental interest that have previously been found insufficient to justify a prior restraint. Our respect for the Legislature and its enactment of the UTSA cannot displace our duty to safeguard the rights guaranteed by the First Amendment. Accordingly, we are compelled to reverse the preliminary injunction.

To the extent the UTSA dictated a contrary result, it must yield to the First Amendment. Said the court:

The scope of protection for trade secrets does not override the protection offered by the First Amendment. The First Amendment prohibits the enactment of any law "abridging the freedom of speech …" The California Legislature is free to enact laws to protect trade secrets, but these provisions must bow to the protections offered by the First Amendment.