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[dvd-discuss] FW: SJ MercuryNews, Ruling a blow for DVD industry (11-02-2001)(Emailing: dvdsuit02.htm)

Title: Ruling a blow for DVD industry (11/02/2001)
f.y.i. -- (a bit behind in reading news, mails, etc.)


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Mercury Center Business

Published Friday, Nov. 2, 2001, in the San Jose Mercury News

Ruling a blow for DVD industry

free speech wins over trade protection

Appeals court overturns injunction blocking Web sites from distributing unscrambling technology,
saying it went too far.

Mercury News

Ruling that free speech deserves more protection than trade secrets in cyberspace, a state appeals court dealt a blow Thursday to the DVD industry in its legal fight to prevent Web sites from posting software to unscramble the encryption on DVDs.

Concluding that First Amendment rights trump California's stringent trade secrets laws, the 6th District Court of Appeal in San Jose overturned an injunction that in practice has blocked dozens of Web sites from distributing DeCSS, a popular method for cracking the encryption scheme used by the industry to prevent copying of digital versatile discs.

DVDs are an increasingly popular medium for distributing movies and music, and the industry argues that the encryption format is a trade secret that must be protected. However, the First Amendment is more important, the court said.

The DVD industry'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,'' Justice Eugene Premo wrote for an unanimous three-judge panel.

The California appeals court ruling won't result in the DVD decryption information being immediately unleashed on the Internet. In a related case, a federal judge in New York last year issued a similar injunction against Web site operators that remains in force.

But if upheld, the California ruling marks an unprecedented establishment of free speech rights in cyberspace and could have sweeping ramifications for the ability of businesses to police their trade secrets on the Internet.

The California appeals court ruling stems from a 2-year-old lawsuit filed by the Morgan Hill-based DVD Copy Control Association, which has sought to bar Web sites with links throughout the world from posting the software keys to the DVD encryption program.

The injunction had been issued against Andrew Bunner, the operator of one of the sites, but Thursday's ruling applies broadly to the many sites named as defendants by the industry.

The DVD industry, which is also backed by a computer industry trade group, vowed to quickly appeal the ruling to the California Supreme Court.

``The decision would be a devastating blow to the U.S. economy, and it makes absolutely no sense,'' said New York attorney Jeffrey Kessler, who represents the DVD Copy Control Association. ``The decision is crazy. Beyond our case, if this decision becomes the law of the United States, all trade secrets laws are unconstitutional.''

Civil liberties groups and lawyers for the Web site operators, meanwhile, called the decision a landmark endorsement of First Amendment rights on the Internet.

``What this case isn't about is intellectual property rights,'' said Robin Gross, an attorney with the Electronic Frontier Foundation. ``What it is about is the First Amendment rights of people who come across information in the public domain who want to republish and discuss that information.''

The ruling was a change of fortune for free speech advocates, who have repeatedly lost in their legal fight with the DVD industry.

Many of the Web site operators are Linux enthusiasts who have said they legitimately reverse-engineered the DVD technology to allow DVDs to be played on computers using the Linux operating system, and the dispute traces back to a 15-year-old computer whiz in Norway who first posted the technology in 1999.

In January 2000, Santa Clara County Superior Court Judge William Elfving issued a sweeping injunction barring the posting of the code after finding the industry's trade secrets would be lost if scofflaws were allowed to post it, unrestricted, on the Internet. Elfving concluded that unfettered access to information on the Internet does not equal a license to steal or distribute protected trade secrets.

But the appeals court determined that the injunction goes too far, cutting off the exchange of information -- in this case, source code -- among people who may not even know they are distributing a trade secret.

Contact Howard Mintz at hmintz@sjmercury.com or at (408) 286-0236.

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