30 June 2000. Thanks to Anonymous.

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       et. al.,
                  v.                           00CV277(LAK)
       ERIC CORLEY, et. al.,
                                               June 27, 2000
  10                                           4:00 p.m.

  11   Before:

  12                       HON. LEWIS A. KAPLAN,

  13                                           District Judge

  14                            APPEARANCES

            Attorneys for Plaintiffs
  16   1585 Broadway
       New York, N.Y., 10036-8299
            LEON GOLD
  19        Attorneys for Defendants
       488 Madison Avenue
  20   New York, N.Y., 10022\

       Motion Picture Association




   1            (In open court)

   2            THE DEPUTY CLERK:  Universal City Studios, Inc., et

   3   al., v.  Eric Corley, et al.  Is the plaintiff ready?

   4            MR. GOLD:  Yes.

   5            THE DEPUTY CLERK:  Defendants ready?

   6            MR. HERNSTADT:  Yes.

   7            THE COURT:  We're going to deal with two

   8   subjects this afternoon, the parties' application with respect

   9   to the deposition of Mr. Eisner and the other is the

  10   defendants' latest request to adjourn the trial.  Mr. Gold, on

  11   the first issue.

  12            MR. GOLD:  With respect to Mr. Eisner, your Honor, we

  13   have submitted correspondence to you that I think lays out the

  14   situation.  Mr. Eisner will not be testifying.  We don't

  15   believe he has firsthand personal knowledge of any of the

  16   issues.

  17            THE COURT:  You say he will not be testifying.

  18            MR. SIMS:   Mr. Eisner he will not be testifying.

  19            THE COURT:  I thought that was up to me to decide.

  20            MR. SIMS:  I'm sorry.  At trial, we're not calling

  21   him as a witness at trial.  Whether he's deposed is entirely

  22   up to you, your Honor, but it ought not to be a reason to

  23   depose him that he is expected to testify at trial, because we

  24   have no intention of presenting him at trial.  The only

  25   basis -- I've gotten a letter from defendants today and I


   1   don't know if your Honor yet has that letter that explains why

   2   in their view --

   3            THE COURT:  There has been a traffic jam to my

   4   anteroom today.

   5            MR. SIMS:  I'm sorry.  I believe every one of our

   6   letters has been responsive, but, in any event, I did just get

   7   their letter, and it's dated June 27th to your Honor, and I

   8   must say having read it, I think it makes the case why he is

   9   not an appropriate witness and ought not to be deposed, not

  10   why he ought to be.  I have done a search through Lexis and

  11   Nexis of Mr. Eisner with a paragraph of either DCSS or TSS and

  12   come up with nothing other than an article in the Village

  13   Voice dated today, so I'm glad to answer any questions.

  14            We have offered them weeks ago either Mr. Preston or

  15   Mr. Sanford Litvack both of whom know substantially more or

  16   more than Mr. Eisner on the general subject which I think is a

  17   subject appropriate for Congress, and not really for a case in

  18   an Article 3 Court on the general subject of piracy and why

  19   the statute was urged upon Congress, and it was in fact

  20   passed, but as to specific information that we understand to

  21   be relevant to any issue in this case or calculated to lead to

  22   the discovery of any such issue, we don't think Mr. Eisner has

  23   that testimony, and given the position, the business of his

  24   schedule, we don't think it's appropriate.

  25            If they wanted to start with Mr. Litvack or


   1   Mr. Patton and then found some basis to depose Mr. Eisner we

   2   might be in a different place.  I can't imagine that that

   3   would happen, but certainly on the present record I think the

   4   deposition should be not permitted.

   5            THE COURT:  Mr. Garbus, Mr. Hernstadt.

   6            MR. HERNSTADT:  Good afternoon, Judge.  Actually we

   7   think that their initial letter to the Court proves our case,

   8   Mr. Eisner has significant personal knowledge --

   9            THE COURT:  Well, he's probably right.

  10            MR. HERNSTADT:  -- about the Internet, about the

  11   piracy in the Internet about specifically technologies like

  12   DVDs, about -- he did presentations to, power point

  13   presentations showing slides of stills taken from different

  14   movies which he made point of informing the audiences that

  15   licenses to take out DVDs where he made a similar presentation

  16   to Congress testifying before the legislative body.

  17            THE COURT:  What in any event does that have to do

  18   with the issues in this case?

  19            MR. HERNSTADT:  We believe Mr. Eisner is also well

  20   informed about the advent of broad band when the Internet is

  21   actually going to be a legitimate vehicle for piracy which he

  22   says in letters to employees and his resignation is immediate

  23   risk.  More importantly we need to know from Mr. Eisner where

  24   he gets his information, what do the plaintiffs know, and the

  25   MPAA when did they know it.


   1            THE COURT:  Why is that relevant?

   2            MR. HERNSTADT:  That at least two of the defense, one

   3   defense, that they knew at the time, your Honor, you summed up

   4   what his argument is, he was sold a bill of goods.  They knew

   5   at the time they filed this case that UCSS did not present a

   6   threat of piracy and that their allegations and statements --

   7            THE COURT:  Don't we get to the issue of what they

   8   knew and when they knew it if and when they use the thing and

   9   you then move for sanctions?

  10            MR. HERNSTADT:  I think that's one time we would get

  11   to the issue, but I think we have to be able to prove it.  The

  12   only way to prove it is if we find out when they knew it and

  13   what they knew.

  14            THE COURT:  You're telling me the only way of proving

  15   that ECCS doesn't create any risk of privacy is through the

  16   mouth of Michael Eisner?

  17            MR. HERNSTADT:  No.  What I'm telling you is that is

  18   one of the ways he's acting in bad faith.  We can certainly

  19   prove that DCSS doesn't prove the risk of piracy through the

  20   witnesses.

  21            THE COURT:  If they produce evidence in court here

  22   that establishes that you violated DMTA and there is a risk of

  23   irreparable harm the fact, if it be a fact, that they went off

  24   half cocked before they had the information doesn't help you

  25   one bit, does it?


   1            MR. HERNSTADT:  If that were true, but we don't

   2   believe that will be proven.

   3            THE COURT:  If it's not proved you can then move for

   4   sanctions afterwards if you think you can prove what you now

   5   say.

   6            MR. HERNSTADT:  We say also that if they come to a

   7   court of equity seeking an injunction that injunction must be

   8   denied so their knowledge at the time they filed the suit is

   9   very relevant.

  10            THE COURT:  Unclean hands is a defense.  It's a plea

  11   in abatement.  It is an argument that says even if the

  12   plaintiff has established that they are otherwise entitled to

  13   win, because of their inequitable behavior we win even though

  14   they are right on the merits, correct?

  15            MR. HERNSTADT:  Yes, sir.

  16            THE COURT:  Okay.  Now, if they're right on the

  17   merits you have no defense based on the fact, if it be a fact,

  18   that they didn't have an adequate basis when they started for

  19   thinking they were right if in fact they come up with the

  20   goods by the time of trial, isn't that true?

  21            MR. HERNSTADT:  Not exactly, because their whole case

  22   is one that doesn't look at harm, and if the Court for some

  23   reason determines that harm is not a part of the statute then

  24   we feel we have this defense in hand.  We think that the

  25   statute 1201 includes, must include a notion of harm.  You


   1   can't forbid a right that doesn't cause harm.

   2            THE COURT:  Assume you're right, we go to trial and

   3   they prove harm.  Let's take that hypothetical.  They win,

   4   right?

   5            MR. HERNSTADT:  Under your hypothetical, yes.

   6            THE COURT:  And they win even if at the date they

   7   file the complaint they didn't have the evidence in hand.

   8            MR. HERNSTADT:  Right, your Honor, that is one of the

   9   ways in which unclean hands would apply in this defense.

  10   That's only one of the defenses.  The other way which I

  11   suggest applies if the Court on the one hand accepted their

  12   argument -- I don't think you will, and I hope you won't --

  13   but their argument that in fact this is incredibly simple

  14   case, this is banned the provision of certain devices, this is

  15   a circumvention device, case over, let's go home.

  16            One of the things you want to show is that it has to

  17   have a necessary of harm, and if they didn't know at the time

  18   they filed the suit that there wasn't any harm, in fact they

  19   knew the opposite, I don't think, in fact, I'm quite positive

  20   they're not going to be able to show harm now, and, therefore,

  21   I accepting your hypothetical because you've asked me to.  I

  22   don't think that is what is going to be shown.  In fact, I'm

  23   quite sure it won't be.  It's technologically not possible to

  24   use the Internet in any way at all right now and for the next

  25   two years to transmit the DVD.  It is not a vehicle that will


   1   cause any harm whatsoever to the defendants, and I believe

   2   that they knew that.

   3            THE COURT:  And it's your position they will not be

   4   able to prove otherwise at trial.

   5            MR. HERNSTADT:  That's correct, sir.

   6            THE COURT:  How does it advance your case to prove

   7   that six months ago they couldn't have proved otherwise.

   8            MR. HERNSTADT:  I think it's important for us to know

   9   not just intent, but also for waiver.

  10            THE COURT:  Waiver?

  11            MR. HERNSTADT:  Yes.  They were aware back in October

  12   DVDs had been purchased all over the world on hundreds and

  13   hundreds of sites and they did nothing about it.  They brought

  14   one suit against three defendants in New York, and that's it.

  15   They've done absolutely nothing to stop this terrible threat,

  16   the threat to destroy the business, to destroy the movie

  17   industry.  This dire threat that had done been quoted in

  18   Variety, The New York Times, and in front of Congress saying

  19   it poses a potentially fatal threat to the movie business.

  20   There has been nothing about it.

  21            And I think what he knew as a very prominent the CEO,

  22   of one of the plaintiffs is relevant in this case.  He made it

  23   an issue.  He's injected himself into the debate.  He's used

  24   his prominence and his influence to try and persuade the

  25   public and legislatures that --


   1            THE COURT:  Yes.  But before me is not a public

   2   debate.  The issue is this lawsuit.

   3            MR. HERNSTADT:  I understand that.

   4            THE COURT:  I'm not adopting legislation or any of

   5   these other things you seem to be worried about.

   6            MR. HERNSTADT:  I understand that.  The reason we

   7   think that Michael Eisner is appropriate person to be deposed,

   8   he probably has a great deal of information if he can present

   9   power point presentation to Congress and selected audiences.

  10            THE COURT:  Last time I looked there are six year

  11   olds who present power presentations.

  12            MR. HERNSTADT:  He's talked very intelligently about

  13   the presentation he was giving, at least in the transcript

  14   that we were given.  We haven't actually seen his

  15   presentation.  He knows something.  He knows a great deal.  I

  16   will note by the way that we had noticed his deposition and

  17   the plaintiff has not produced him, I think the reason being

  18   that there was some kind of a quid pro he quo, they would give

  19   us Mr. Litvack and we would have to give up Mr. Eisner.  I

  20   think even today they tend to show that the appropriate way to

  21   do is produce Mr. Litvack, we insist Mr. Litvack, sounds sort

  22   of backwards, but the reality is Mr. Litvack was not at these

  23   presentations, he didn't make these presentations.  It's

  24   impossible for me to understand why he would have more

  25   information about these presentations.  It's not just the


   1   presentation, it's also what did he say, what did people say

   2   to him?  How well known is it that it doesn't present any

   3   threat of harm or risk of danger?

   4            THE COURT:  What difference does that make to this

   5   case?

   6            MR. HERNSTADT:  I think the difference it makes to

   7   this case that there are cases that distinguish an incredibly

   8   dangerous device.

   9            THE COURT:  If you are right, they are going to lose

  10   given your premise about harm.

  11            MR. HERNSTADT:  Well, I mean I think that we can

  12   learn from Mr. Eisner what he's been told and who told him

  13   that will also give us other people that we may wish to

  14   depose.  You know, perhaps what you're saying is that Mr.

  15   Eisner's deposition is most appropriately taken in the course

  16   of a sanctions hearing if we win, if they show that as a

  17   matter of negotiation and as a matter of law that the

  18   plaintiffs knew at the time they filed the case it didn't

  19   impose a risk, you know then I guess his public statements

  20   might be relevant, then it seems to us that it's important to

  21   get it now because it's not only, because it will lead we

  22   believe to the discovery of admissible evidence.

  23            THE COURT:  How?

  24            MR. HERNSTADT:  What does he know?  When did he know

  25   it?  Who told him?  What was he given?  Was he given


   1   documents?

   2            THE COURT:  You keep saying that.

   3            MR. HERNSTADT:  Yes.

   4            THE COURT:  The point you are not being responsive to

   5   is why does it matter what he knew, who told him, et cetera?

   6            MR. HERNSTADT:  I think that goes to defense of

   7   waiver.

   8            THE COURT:  Tell me what the waiver argument is.

   9   When I went to law school waiver was defined as the

  10   intentional relinquishment of a known right.

  11            MR. HERNSTADT:  Right.

  12            THE COURT:  Now, do you really legitimately stand

  13   here and represent to me as a member of the bar of this court

  14   that you think you are going to get Michael Eisner to say

  15   directly or indirectly anything that would support a

  16   responsible argument that Disney deliberately decided not to

  17   pursue other web sites because it wished to surrender whatever

  18   rights it might have?  Is that really what you are saying to

  19   me?

  20            MR. HERNSTADT:  Your Honor, I don't think that's what

  21   we have to show.

  22            THE COURT:  Well, I do.

  23            MR. HERNSTADT:  That his intentional relinquishment

  24   that was a choice were it to relinquish the rights?  I think

  25   the waiver --


   1            THE COURT:  Relinquishment of a known right, the

   2   Supreme Court the Second Circuit, the New York Court of

   3   Appeals that is the standard.

   4            MR. HERNSTADT:  I think what we will be able to show

   5   is that what they relinquished, the right that they

   6   relinquished and they knew they were relinquishing is a right

   7   that was intangible, it didn't exist.  In other words, they

   8   didn't have to go out to other web sites because they knew

   9   that there was nothing to go out there, that he didn't approve

  10   a threat, that it wasn't dangerous.  This case I think is a

  11   test.  They want to get a court in the Southern District

  12   preferably that will stamp am imprimatur.

  13            THE COURT:  Let me ask you this.  Suppose you were

  14   defending Brown versus Board of Education and you came in and

  15   said that you wanted to take the deposition of Thurgood

  16   Marshal for the purpose of showing that the NAACP knew that 70

  17   percent of the school districts in the United States were

  18   segregated, and that they elected to sue only the school board

  19   of Topeka, Kansas in order to show that the NAACP waived their

  20   right to challenge segregated public schools in the United

  21   States.  You like that argument?  Is that a good one?

  22            MR. HERNSTADT:  I don't think that's the analogy

  23   here.

  24            THE COURT:  I think it's pretty darn good, counsel.

  25            MR. HERNSTADT:  Your Honor, I think the analogies are


   1   different.  That would presume that Thurgood Marshal knew that

   2   segregation wasn't a problem.  In this situation they know.

   3            THE COURT:  Mr. Hernstadt, let me have that one

   4   again.

   5            MR. HERNSTADT:  That Thurgood Marshal would know that

   6   segregation isn't a problem.  In other words, what we're

   7   saying is that the reason that they brought the lawsuit here

   8   and nowhere else is that they know it's not a threat.  They

   9   have no reason to go after DCSS in other jurisdictions.

  10            THE COURT:  Do you have another argument?

  11            MR. HERNSTADT:  For Mr. Eisner?

  12            THE COURT:  Yes.

  13            MR. HERNSTADT:  Well apart from ordinary course of

  14   discovery he is a person with knowledge as opposed to the CEOs

  15   and executives in cases cited by the plaintiff.  He has

  16   personal knowledge, and he's someone who can tell us, who can

  17   give us discovery that would lead to the production or

  18   discovery of admissible evidence.

  19            THE COURT:  You're going to ask him pretty much the

  20   questions that were asked of Mr. Valenti.

  21            MR. HERNSTADT:  Those will be some of them.  I think

  22   we'll ask him more specific questions because we have

  23   statements from him.

  24            THE COURT:  Anything else on the is issue?

  25            MR. HERNSTADT:  No, sir.


   1            MR. SIMS:  Nothing other than I think the colloquy

   2   your Honor has just had makes plain that the defense which

   3   underlies almost all of this discovery that we've been

   4   slogging away with lately which is variously referred to as

   5   waiver or selected prosecution, and today we heard unclean

   6   hands, there is no there there.

   7            Your Honor's early opinion lays out the elements of

   8   the 1201 violation.  Harm was an element on the preliminary

   9   injunction, but it is not an element of the violation of 1201

  10   itself and on the final trial of this matter one can read the

  11   statute 15 times and be left totally unpersuaded that the

  12   elements that Mr. Hernstadt believes are --

  13            THE COURT:  Let's not get carried away.  In order to

  14   get an injunction even on a final trial you have to establish

  15   the lack of adequate remedies at law, right?

  16            MR. SIMS:  That's correct, but I don't think it's the

  17   same standard.

  18            THE COURT:  And the charge is that whatever remedy or

  19   lack thereof is inadequate.

  20            MR. SIMS:  There is no question unless there is a

  21   threat of harm and I think we'll have no trouble and great

  22   success.

  23            THE COURT:  I look forward to hearing about it.  All

  24   right.  Let's go on to the other question which is your

  25   request for adjournment.


   1            MR. HERNSTADT:  Your Honor, I don't know how much you

   2   want to hear about that.

   3            THE COURT:  Anything you want to say within

   4   reasonable temporal limits.

   5            MR. HERNSTADT:  Okay.  The reason I say that is

   6   because we provided your Honor with a number of letters.  They

   7   provided you with a number of letters.  The realities I think

   8   are this:  By your order dated May 12th you moved the trial up

   9   from December 5th to July 17th and you closed discovery from

  10   October 20 to July 5.  Between May 12 and June 7 defendants

  11   were given exactly five depositions and we received virtually

  12   no documents.  From June 8 --

  13            THE COURT:  The last letter I got from you complained

  14   that you had 13,000 documents.

  15            MR. HERNSTADT:  Of which 13,000 provided in the last

  16   two weeks.  Since June 14 we've gotten 13,000 documents of

  17   which nine thousand we got in the last four days.  We got on

  18   June 22 we got about 500 and on yesterday we got another four

  19   thousand.  In other words, what happened is during the first

  20   four or five weeks after June, you moved the trial up and

  21   permitted parties to engage in expedited discovery, we got

  22   virtually nothing.

  23            THE COURT:  Isn't it at least part of the reason for

  24   that between January and May 12th you did essentially nothing?

  25            MR. HERNSTADT:  We didn't come --


   1            THE COURT:  For example, as of May 11th which is when

   2   I raised the issue of moving up the trial, isn't it a fact

   3   that you had noticed the deposition of the plaintiffs 30(b)(6)

   4   notices and I believe no one else.

   5            MR. HERNSTADT:  The MTAA and Jack Valenti.

   6            THE COURT:  And that now you have noticed some thirty

   7   or more depositions and with the exceptions of the eight

   8   plaintiffs and the MCAA all of the them were noticed after the

   9   trial date was set.

  10            MR. HERNSTADT:  I would have to look at that chart.

  11   I'm not -- I imagine that that's the case, your Honor.

  12            THE COURT:  I did look at the chart, and I imagine

  13   it's the case, too.

  14            MR. HERNSTADT:  Okay.  Part of the reason is most of

  15   the people that we have noticed I think the major reason for

  16   that is most of the people we noticed were people that we got

  17   their names through depositions.  In other words, of Mr.

  18   Schuman and of Mr. Jacobson, and particularly Mr. Jacobson.

  19   Some of the other ones we got off of web sites.

  20            You know, your Honor, we came into the case the end

  21   of March and there was a very -- we came in literally -- or

  22   the middle of March.  We came in five days before we met with

  23   your Honor for the first conference which the trial date and

  24   the discovery date that we requested then reflected our

  25   assessment of the complexity of the case, the amount of work


   1   that we have to do in a very short period of time and the

   2   number of people that we have to talk to around the world.

   3            We have seen that in fact to be the case.  Witnesses

   4   are in Norway, California, Texas, New York, Boston, Cambridge,

   5   Princeton, New Jersey.  They're all over the country.  They

   6   are difficult to get ahold of.  A lot of them are academics

   7   who take the summer off, they spend the summer going to

   8   conferences around the world, bless their hearts.

   9            THE COURT:  I know.  I'm very close to an academic

  10   who does that.

  11            MR. HERNSTADT:  So you understand that.

  12            THE COURT:  Believe me I do.

  13            MR. HERNSTADT:  It took us a little while to get up
  14   to speed and as soon as we got up to speed we started and by

  15   the way within two weeks of our or three weeks of our entry in

  16   this case the plaintiffs filed a motion to expand the

  17   injunction to include Reimerdes.  During the time practically

  18   that we've been involved in the case we had a May 2nd

  19   opposition, we had a cross motion.  On June 4th the plaintiffs

  20   replied on June 13th.  Then there was a privilege motion on

  21   June 13th, June 19, June 21.  There has been extensions as you

  22   know motion practice.

  23            During the first four or five weeks after the May 12

  24   order we got virtually nothing in terms of discovery.

  25   Starting about June 15, June 20, the plaintiffs suddenly


   1   started making their demands.  They didn't notice any

   2   depositions until well Mr. Corley noticed June 7.  They didn't

   3   notice any other dispositions until the end of June.  They've

   4   had the names of these clients since the beginning of May, but

   5   they waited until the end of June.  Very little time was left

   6   by the time they started to say now we want to take 15

   7   depositions, we want to take ten depositions.

   8            THE COURT:  They are not going to get to take them

   9   all.

  10            MR. HERNSTADT:  Your Honor, some of these people are

  11   in Norway, some of these are in California, some these people

  12   are in Texas, some of these people are not available for the

  13   trial.  Even if they don't want to take the depositions some

  14   of them we need to take because they won't be able to come to

  15   appear.

  16            THE COURT:  You were actually in the case by the

  17   middle of February, weren't you?

  18            MR. HERNSTADT:  No.

  19            THE COURT:  Mr. Garbus told me on May 2nd on the

  20   record that you had been in the case and doing everything

  21   humanly possible for two and a half months already.

  22            MR. GARBUS:  Well, I don't have that in front of me.

  23   We went into the case, I think we had a court conference with

  24   the court and we had been retained the weekend before whenever

  25   that weekend was.


   1            THE COURT:  On May 2 you said:  "My client has done

   2   everything, everything, everything that you can conceivably do

   3   in the last two and a half months since I've been involved in

   4   this case to bring this matter before you and to start in

   5   discovery."

   6            MR. GARBUS:  I don't have a sense of the chronology.

   7   I appeared before the Court and I said that we had been

   8   finally retained over the weekend, so I don't know when that

   9   is said.

  10            THE COURT:  You said it on May 2nd.  This is said May

  11   2.

  12            MR. GARBUS:  All I can tell is what I said when we

  13   met back in the courtroom, namely, that I'd been retained.

  14   And let me just relate to something else.  He said I'd been

  15   retained the weekend before we appeared in court and that's

  16   what I told the Court at the court conference.  The other

  17   thing I want to point out is with respect to the depositions

  18   we had sent out the depositions to eight plaintiffs, and the

  19   depositions for eight plaintiffs when we got into the question

  20   of the option of people from the MPA which they said

  21   originally was with respect to the eight plaintiffs you don't

  22   have to produce one because they all have the same knowledge

  23   we learned not to be true.  When we got the discovery log we

  24   found each of them had different documents.  I just wanted to

  25   respond to your question about representation.


   1            THE COURT:  That's what you told me now, but in the

   2   transcript of the proceedings before me on May 2nd of this

   3   year at page 14 you made the statement that I have just read.

   4            MR. HERNSTADT:  Your Honor, I can tell that you

   5   Mr. Garbus spoke in error.  When we met with your Honor in the

   6   robing room for the first conference I believe that he said

   7   that we had just been hired, I know that we've been on the

   8   case for four days at that point.  If Mr. Garbus said two and

   9   a half months he misspoke.  He's not known to be exactly

  10   precise with dates, and I apologize on behalf of the

  11   defendants if has been confusing.

  12            But be that as it may, what we saw was defendants

  13   trying very, very hard persistently daily to get discovery, to

  14   get witnesses to take depositions and being resisted.  We saw

  15   the plaintiffs suddenly with two weeks to go before the trial

  16   saying we need this discovery, we need that discovery, we need

  17   this discovery.  There is still eight witnesses that the

  18   defendants would like to depose, need to depose, witnesses

  19   that are plaintiffs witnesses and MPA witnesses.  Part of what

  20   we're waiting for is the decision on the privilege motion, not

  21   to push your Honor, simply because it would be a waste of time

  22   to take a deposition knowing that we might have to retake it

  23   again.

  24            THE COURT:  I suggest you not wait.

  25            MR. HERNSTADT:  Okay.


   1            THE COURT:  If you have to reopen something, you'll

   2   reopen it.

   3            MR. HERNSTADT:  Very good.  I had asked for dates.

   4   We were finally given dates yesterday.  We were given dates

   5   for three people.  We still haven't been given dates for the

   6   other witnesses whose depositions were deferred.

   7            THE COURT:  Let me hear the rest for one minute.  I

   8   issued an order directing that the privilege logs and the

   9   documents be delivered to me for in camera inspection.  When

  10   are you going to do that?

  11            MR. SIMS:  Your Honor, I have the privilege logs here

  12   other than for the MPA and Paramount which are not complete.

  13   I would like to discuss that issue with you and I'm prepared

  14   to do it now or a little later.

  15            THE COURT:  We'll do it later.

  16            MR. GARBUS:  Your Honor, can I just interrupt and say

  17   one thing just a question of integrity of what I told the

  18   court I think is what the defendants are saying to the Court,

  19   namely, that up until three or four days, and I don't have a

  20   memory of all those papers, they did get other counsel and

  21   they did get me I think at the end of that week, and one of

  22   the issues on the qualification of the defendants was their

  23   inability to get other counsel.  So to the extent that as I

  24   understand it three or four days before I got into the case,

  25   which is the day I appeared before you, they had done nothing


   1   other than trying to get other counsel and get other counsel

   2   to do things they thought, as I told you that even an answer

   3   had been filed, we learned, and we told you that they had been

   4   misled and the answer had not been filed.

   5            So to the extent that there is a mistake there I

   6   apologize.  I was very clear though when I came before you and

   7   we tried to set a September 8th date.

   8            THE COURT:  With all due respect, you fellows have

   9   been very clear several times and you haven't always been

  10   complete, but you're always clear on that point.

  11            MR. GARBUS:  I think on this point I don't want to

  12   get past I think on this point we walked in the first time I

  13   appeared we talked about a September 8 date.  There was no

  14   particular objection to it.  The way the expedited trial comes

  15   up is I make the motion or we make the motion because they are

  16   not complying with discovery, and then we got caught up in

  17   disqualification motion, and one of the things you said in the

  18   disqualification motion and I don't want to paraphrase what

  19   you said, you remember what you said, the relationship between

  20   the early trial and the disqualification.

  21            Up until then everything had been going along towards

  22   the December date, and we were the ones who brought the motion

  23   to expedite discovery and what comes out of that then is an

  24   expedited trial.  There is absolutely no way that we can pull

  25   this case together by July 17th.


   1            THE COURT:  Mr. Garbus, I think you could have pulled

   2   this case together by March 15th, and I think that any

   3   reasonable lawyer in New York could have, and I think that if

   4   the defense had spent half the time on actually preparing the

   5   case instead of on public relations this case would be over.

   6            MR. HERNSTADT:  Your Honor, just to respond very

   7   briefly to that.  Apart from not having gotten into the case

   8   until within a week thereafter, we haven't been given the

   9   documents, we haven't been given the witnesses.  They haven't

  10   been made available to us.  We got four thousand documents

  11   yesterday from the MPA.  They were due May 24th and we got

  12   them yesterday.  It's very, very difficult, your Honor, to

  13   prepare for a trial with witnesses all over the country and

  14   indeed all over the world when we're not being given

  15   discovery.

  16            It would be the only, the best, the way the defense

  17   needs to present the case we need to be able to prepare our

  18   case.  This is a very significant case.  This is a first test

  19   of the GMCA.  We need to be able to come in here fully

  20   prepared with all the witnesses interviewed, with all the

  21   witnesses deposed by the other side, if they want to, with all

  22   of their witnesses deposed by us and all of the documents

  23   complete, the production of documents complete, before we take

  24   the depositions, so we don't have to come back to your Honor

  25   and say we just got something after the deposition was taken,


   1   we need to go back.

   2            For example, when Mr. Valenti was deposed got a

   3   document not even from Paramount, not even from the MPA but

   4   from document two days after we took the deposition of Mr.

   5   Valenti in which the November 9th press release where he says

   6   DSS poses no threat at all.  The documents were reviewed by us

   7   in the end, way, way before the deposition.  We still

   8   haven't --

   9            THE COURT:  I'll let you now, Mr. Garbus, but this is

  10   not going to take forever.  You want to say something, say it

  11   but either you're going to present it or Mr. Hernstadt.

  12            MR. GARBUS:  Mr. Hernstadt.

  13            MR. HERNSTADT:  So because of that it's very

  14   difficult to prepare for a case in June, depositions in a

  15   coherent fashion.

  16            THE COURT:  You're telling me you have a press

  17   release that says there is no harm here.

  18            MR. HERNSTADT:  There is an MPA press release where

  19   he says, Mr. Valenti, doesn't provide any real harm, most

  20   people can't use it, it's too complicated to use.  We want to

  21   ask him what do you mean by that, but we never had.

  22            THE COURT:  You think it really would serve, what it

  23   means?

  24            MR. HERNSTADT:  I want to know what he means by that

  25   it, the program is too complicated, the technology doesn't


   1   exist.  What do they know?  When did they know it?  And I

   2   think those are relevant issues.

   3            THE COURT:  Well, I know you do.

   4            MR. HERNSTADT:  Thank you.

   5            MR. GARBUS:  Your Honor, can I say my one thing?

   6            THE COURT:  Yes, you can.

   7            MR. GARBUS:  We tried to take DVD depositions in the

   8   early part of last month.  We couldn't get it.  We got it last

   9   week.  What we learned during the DVD depositions two things.

  10   One, that there is a report which is given to the DVD which

  11   says basically that DECS is no threat anywhere now in the

  12   future that consumers can't use it.  We learned about this

  13   Macrovision report for the first time last week.  We then are

  14   trying now to get documents from Macrovision and served a

  15   notice of on Macrovision they refused to turn over the report.

  16   Secondly, what we've learned is their allegation before you,

  17   one of the allegations of damage.

  18            THE COURT:  They refused to turn over the report and.

  19            MR. GARBUS:  We learned about Macrovision last week.

  20   We served a subpoena on Macrovision and we called Macvision.

  21            THE COURT:  What steps have you taken to enforce

  22   their obligation to comply with compulsory process of federal

  23   court?

  24            MR. GARBUS:  This happened last Tuesday, Wednesday

  25   and Thursday.


   1            THE COURT:  Almost a week later and the answer is

   2   nothing?

   3            MR. GARBUS:  We came back from the deposition on

   4   Friday.  We've been out of town deposition all day today with

   5   Goldstein.  We've also been litigating.  The other thing we

   6   found out, they took the privilege as did the MPA on a variety

   7   of questions.  The other thing we found out is one of the

   8   allegations in their papers with respect to the allegation of

   9   harm is that the DVD audio had been stopped and the laser use

  10   of DVD audio stopped Universal at trial is because of the

  11   publication of DECSS that's in the record that's

  12   uncontradicted we examined DCCA on Wednesday and they say

  13   that's not true.  They said the DVD audio is coming out.  We

  14   tried to get the names of the companies.  He gave us the names

  15   of the companies.  He said it was never stopped.

  16            So what you have here are a very substantial number

  17   of facts, none of which are within our knowledge, all of which

  18   was in their files and it's fundamentally, what it does is a

  19   day, a day a day to get it current, that's the nature of this

  20   case.

  21            THE COURT:  Mr. Gold?

  22            MR. GOLD:  Yes, your Honor.  I think that I mean I

  23   know the deal about the depositions, and Mr. Sims thankfully

  24   has been handling the document, overseeing the document

  25   production and the work done on that by all of the plaintiffs.


   1   With respect to our depositions the ones we want for several

   2   weeks, we have told them we only want to take the depositions

   3   of those twenty declarants alleged experts who they will put

   4   on the stand.  We didn't think they'd pick more than three or

   5   four.  Late last week we were told they were thinking of

   6   putting six to eight witnesses on the stand from that

   7   selection of twenty and we said, fine, let's take them.  We're

   8   willing to do them two a day and work Saturday and Sunday.

   9   Actually, it could have been over by now.  And that's what we

  10   offered.

  11            We got a response that, as I wrote to the Court, we

  12   got some actual dates, but they weren't certain and would have

  13   to be confirmed.  They came up with other dates that were

  14   after the cutoff period of July 5th.  There may have been one

  15   of those people that they said, of this eight or so people

  16   they said they were actually going to put on the stand where

  17   we got a date and we accepted that date.  All we want, and

  18   we'll limit it to the same half day we offered, two a day,

  19   weekends, that wouldn't have been necessary if we were told

  20   before, well, we can do it now.  And we will easily complete

  21   this before the discovery cutoff on the terms of the

  22   plaintiff.  We're deposing the plaintiff for two days, one of

  23   which is taking the defendant.  I have the same trouble with

  24   that your Honor mentioned once.

  25            We deposed Mr. Goldstein today.  We're deposing him


   1   tomorrow.  I think we'll be finished by 5.  So I don't see any

   2   problem in completing all the depositions we want.  But we

   3   need them in a room, and we need to be told in fact we're

   4   going to put them on the stand unless some tremendous new

   5   thing happens that would change our minds, so we don't have to

   6   go running around taking irrelevant depositions from people we

   7   don't need the depositions from, they won't be on the stand.

   8            With respect to their depositions, there are still

   9   plenty of time to take the people they want who they are

  10   certain they want.  They are forgetting that the last time we

  11   were here they said to your Honor, well, this can all be done

  12   very fast, if you are going to grant their motion on the

  13   privilege, then all of that can happen very quickly.  Well, we

  14   don't know what your Honor will decide yet, but there are

  15   aren't many witnesses for them to depose if the privilege is

  16   upheld because they were all investigating or helping to bring

  17   this lawsuit.  Many of them were lawyers.  So if you uphold

  18   the privilege they won't have any problem.

  19            And we've already suggested three or four other

  20   people they want, not Mr. Eisner, that's the subject of a

  21   motion.  If, as far as I'm concerned of course I'm their

  22   opponent, but if you decide against us on the privilege

  23   motion, if they take one person from each group there they all

  24   sat in groups doing their work and talking about the same

  25   subjects.  If they take one of them, they'll learn, and we


   1   don't have the privilege, they'll learn what happened.

   2            Now they could take all seven of them if your Honor

   3   gives them permission to do that.  It will be a waste of time

   4   certainly to take more than two.  So they can confirm it a

   5   little bit.  And I think that what this is is the endless

   6   search for issues and defenses that don't have much to do with

   7   the claim, and it should have been, it could have been tried

   8   and can be tried on July 13th and I think --

   9            THE COURT:  I'm not moving it up again.

  10            MR. GOLD:  17th, I apologize.  And we're ready.  And

  11   if they found 20 alleged experts what else are they going to

  12   find with the issues they raised here?  They've got twenty

  13   people to say, you can't copy, okay, well, then they've got

  14   them.  Let's go forward with the case.  I think we should get

  15   on with it and I don't see any reason not to.

  16            THE COURT:  Mr. Hernstadt, anything else?

  17            MR. HERNSTADT:  Very briefly in response.  First of

  18   all, plaintiffs had done absolutely nothing to push this case

  19   from January on.  On January 20th they asked if we would

  20   prohibit as well and you said that they should make a motion

  21   and they waited until --

  22            THE COURT:  They said they would.

  23            MR. HERNSTADT:  They should make a motion and they

  24   didn't do so until after we adjourned the case.  They did not

  25   serve Mr. Corley the defendant with a notice of deposition


   1   until June --

   2            THE COURT:  I know.

   3            MR. HERNSTADT:  They haven't pushed the case and

   4   so --

   5            THE COURT:  I don't think it's fair to say they

   6   haven't pushed the case.  I think it is fair to say that you

   7   have not had the discovery you want.

   8            MR. HERNSTADT:  There you have it, that is exactly my

   9   point, your Honor.  The other thing --

  10            THE COURT:  But what do you have to say to their

  11   version that they told you that they weren't even going to

  12   bother deposing anybody except for Corely unless there were

  13   people you were going to call at trial they couldn't get a

  14   straight answer out of you.

  15            MR. HERNSTADT:  There are 18 declarants we told them

  16   two weeks ago.  I think we said five declarants we were not

  17   going to use.  We reduced the pool in other words to show they

  18   didn't notice any of those people we told them we were going

  19   to have.

  20            THE COURT:  When did you tell them?  That was when?

  21            MR. HERNSTADT:  I believe it was on the 15th, the

  22   14th or the --

  23            THE COURT:  Of June?

  24            MR. HERNSTADT:  Right.  And they asked this

  25   information we started talking about the week before.


   1            THE COURT:  You don't seriously fault them for not

   2   going out and taking discovery when it was their position that

   3   they had no interest in taking depositions of anybody who

   4   wasn't going to be a trial witness and you weren't going to

   5   give them a clue who the trial witnesses were until 13 days

   6   ago.

   7            MR. HERNSTADT:  They never asked about trial

   8   witnesses until two weeks ago and within a week of their

   9   asking for trial witnesses we told them that it would be

  10   predominantly of the declarants we gave them four or five

  11   names of the declarants we were going to use and we told them

  12   we would try and find out of the rest of the declarants who we

  13   use.

  14            The problem is we don't know, for example, Frank

  15   Stevenson will come an testify.  He's in Norway.  We don't

  16   know if Barbara Simons is going to be available.  She's

  17   traveling much of the summer.  We don't know which of the

  18   witnesses are going to be around and which are not.  Most of

  19   our witnesses are very difficult.

  20            THE COURT:  I'm just curious what --

  21            MR. HERNSTADT:  Mr. Stevenson is a cryptographer who

  22   has significant expertise also in Internet technology and in

  23   the Internet itself.

  24            THE COURT:  The other person you just mentioned?

  25            MR. HERNSTADT:  Barbara Simons.  She's presidents of


   1   American Machinery which is the professional association.

   2            THE COURT:  These people you're talking about are

   3   technical experts.

   4            MR. HERNSTADT:  Ms. Simons is not just a technical

   5   expert.  She's more somebody who can talk about she interacts

   6   between the Internet and communicates information and also

   7   encryption studies.

   8            THE COURT:  Anything else?

   9            MR. HERNSTADT:  No, your Honor.

  10            MR. SIMS:  Your Honor, I would like to correct two

  11   factual errors if I could because I think they're important.

  12   Mr. Hernstadt said Mr. Corley wasn't served until the end of

  13   June, and that no deposition notices were served until the end

  14   of June, and there is a letter to your Honor I think within

  15   the last 48 hours complaining we hadn't given appropriate

  16   notice for depositions.

  17            The fact is that we told him on June 13th orally who

  18   we wanted to depose assuming that they were testifying.  We

  19   confirmed that by letter of June 14th and on June 15th out of

  20   abundance of caution we gave to Mr. Hernstadt, he having

  21   already said he would accept notices and subpoenas for

  22   third-party witnesses, depositions notices and witnesses for

  23   Ms. Simons and eight or ten other people.  Not to put a finer

  24   point on it, he made a commitment to accept those notices,

  25   sometime later said that he wouldn't, and then we did go out,


   1   he already had these on June 15th and we served them again

   2   individually, but I think it is quite misleading to say that

   3   defendants didn't know it was June 14 and certainly on the

   4   15th when Mr. Hernstadt got the deposition notices which

   5   depositions we wanted, assuming they would testify.

   6            MR. HERNSTADT:  I must correct Mr. Sims very briefly.

   7   First of all I pointed out that if I did, I apologize, I

   8   misspoke.  Second of all, and much more importantly, I never

   9   said that I would accept service of third parties.

  10            THE COURT:  Sit down.  I don't want to hear any more

  11   of it.

  12            MR. HERNSTADT:  Your Honor, I would just refer your

  13   attention to the discovery discussions memo that was handed up

  14   your Honor on June 8 because in it sets forth what our

  15   agreement was with respect to the parties, nonparty

  16   depositions.

  17            THE COURT:  There was disagreement about that.  Okay.

  18            In the last thirty days I have had 18 letters at

  19   least regarding discovery disputes, and then in a case wherein

  20   some review has spun out of counsels' control.  The factual

  21   issues for trial in this case are narrow and well defined.  I

  22   do not intend to be all inclusive, but the core questions in

  23   the case include these:  Does DECSS as claim in fact

  24   circumvent CSS?  Was it primarily designed and produced for

  25   the purpose of circumventing CSS?  Does it have any


   1   significant commercial purpose for use other than circumvent

   2   CSS?

   3            Are the defendants in this case entitled to the

   4   benefits of the reverse engineering session to the DMCA?  Are

   5   they entitled to the benefits of the encryption research

   6   exception to DMCA?  Is there at least some threat of harm, and

   7   is there any remedy for it other than an injunction?

   8            As I say, that does not attempt to be exhaustive but

   9   it really does show what's at the heart of the case.  I don't

  10   mean to exclude also factors that are relevant to balancing

  11   whatever First Amendment interests there may be in the case

  12   assuming that the plaintiffs establish a violation of the DMCA

  13   without regard to First Amendment consideration.  In that

  14   event obviously evidence of that character could well be

  15   relevant and material.

  16            The purpose of pretrial discovery is two-fold.  It is

  17   to avoid surprise at trial.  It is also to enable both sides

  18   to procure evidence that offers some reasonable prospect of

  19   informing the determination of the issues in the case.  For

  20   the most part, although not exclusively, the factual questions

  21   that are likely to be at issue in this trial relate to the

  22   characteristics of the defendants, the characteristics of the

  23   software and related hardware questions, if there are any, and

  24   defendants' motives.

  25            Indeed, it is arguably the case that the plaintiffs


   1   can make out a prima facie case of a violation of the DMCA by

   2   establishing that CSS effectively controlled access to

   3   copyrighted works which the defendants conceded already in

   4   this case and that the DECS circumvents CSS and has little or

   5   no other purpose.  At least part of that appears to be

   6   undisputed.  In consequence, the principal, although not the

   7   exclusive focus of the trial at this stage appears to me to be

   8   whether the defendants can establish a defense based on their

   9   own motives, their own characteristics and such other theories

  10   as the Constitutional challenge to the statute and possibly

  11   the role of fair use analysis in this controversy.

  12            In these circumstances it has appeared to me from the

  13   start that the defendants had comparatively little need for

  14   pretrial discovery because the resolution of most of the

  15   potentially disputed material issues of fact depends upon

  16   facts no more available to the defendant and certainly not in

  17   a the unique possession of the plaintiffs if indeed the

  18   plaintiffs know anything about them at all.

  19            It has appeared also from the very beginning that the

  20   facts relevant to the trial of this case that likely are known

  21   to the plaintiffs probably are best known to technical and

  22   other executives well below chief executive officers and top

  23   ranking officers.  Although that has been reasonably apparent

  24   since January I have made no effort, at least up to today, to

  25   limit the extent of the defendants' discovery or for that


   1   matter the plaintiffs, although it hasn't been in issue until

   2   today.  That said, discovery in civil litigation is not

   3   boundless.  Rule 382(a) requires the Court's permission for

   4   either side to conduct more than ten depositions without the

   5   written consent of all parties.  Both sides are threatening to

   6   sail right through that limit if given what they are asking

   7   for here.  Quite apart from the limit, Rule 26(c) authorizes

   8   District Courts further to limit discovery in order to protect

   9   parties and other persons from annoyance, from embarrassment,

  10   oppression or undue burden or expense.

  11            Finally, Rule 27(a)(2) permits limitation of

  12   discovery where a party makes unreasonable cumulative or

  13   complicated demands, where it seeks discovery of material

  14   that's readily obtainable from other sources, where it has had

  15   ample opportunity to get what it needs through other discovery

  16   and most significantly for present purposes, where the burden

  17   or the expense of the discovery outweighs the slight benefit

  18   taking into account the needs of the case and the importance

  19   or lack thereof of the proposed discovery in resolving the

  20   issues among other factors.

  21            It has become clear to me that the time has come to

  22   limit the discovery which has gotten entirely out of hand.

  23   There is no justification for the number of depositions sought

  24   in this case.  The plaintiffs need thirty -- excuse me -- 18

  25   or whatever the number was that they advanced and the


   1   defendants need 30, which is the last number I heard from

   2   them, like everybody needs a contagious disease.  It is not so

   3   long ago, indeed, it is only six weeks ago that Mr. Garbus

   4   told me he needed five in order to go to trial.  Because some

   5   day some other court may be looking at this, I've got to take

   6   a moment to make sure that I have the record references handy.

   7            On May 11 at page 11 of the transcript of those

   8   proceedings Mr. Garbus said the following:  "We wish to take

   9   several depositions.  We are prepared to move the date of the

  10   trial up from December 5 and we would like to communicate that

  11   to the Court as soon as we finish five depositions.  If I had

  12   five depositions then I can get the information that I think

  13   is there, we would be prepared probably to go to trial this

  14   summer consistent with the Court's schedule."

  15            He then proceeded to tell me that the depositions he

  16   wanted were those of Mr. Valenti, Mr. Schuman, both of which

  17   he's had or had much of, Mr. Eisner, and you couldn't even

  18   tell me the other two names.  Now when it became apparent that

  19   indeed the trial might be moved up, Mr. Garbus back pedaled

  20   later in that hearing, and I won't speculate as to why, but

  21   the suggestion has been made that the trial is about the last

  22   thing that the defendants want in this case.

  23            Quite apart from what Mr. Garbus may have in the

  24   moment of passion have said or not said, because after all

  25   every advocate is entitled to a flight of hyperbole now and


   1   then, the reason I took the care to outline what I perceived

   2   to be the issues in this case that I did is simply to

   3   illustrate that there just isn't the need for the discovery

   4   program that has been outlined here.  The issues are

   5   predominantly technical.

   6            I rather expect that this case could have been

   7   prepared on all the technical issues by each side hiring an

   8   expert, having the two experts examine the material in

   9   question and agreeing on what the facts are, and if they were

  10   unable to agree as to some point, selecting between them a

  11   mutually respected colleague to offer the Court an opinion

  12   unclouded by allegiance to either side.

  13            The fact of the matter is that you don't have to be a

  14   rocket scientist to understand, for example, that if somebody

  15   has a 56K modem and you've got a 9 gigabyte file or whatever

  16   it is it takes a while to download it.  That as I understand

  17   it is the heart of what the defendants have to say here, and I

  18   won't suggest it's the only thing they have to say, but it is

  19   certainly important to their defense.  Thirty depositions are

  20   utterly unnecessary to prepare that issue or virtually or

  21   virtually all of the others that I've alluded to.

  22            Secondly, beyond the fact that the scope of the

  23   discovery sought is excessive, it is my very clear perception

  24   that to some degree, not entirely, but to some degree this

  25   insistence on discovery is driven in some respects more by a


   1   desire on the part of the defendant to generate publicity for

   2   themselves and to embarrass executives of the plaintiff than

   3   to get material that is relevant and material to litigate this

   4   case.

   5            Late at night I read every word of the deposition of

   6   Jack Valenti.  Very little of that deposition concerned

   7   matters likely to be known to Mr. Valenti that have any

   8   bearing on this case.  A very substantial portion of the

   9   deposition consists of the examiner, defendants' counsel,

  10   framing hypothetical questions and asking that Mr. Valenti

  11   give his opinion as to whether on that particular set of

  12   hypothetical facts the conduct in question did or didn't

  13   violate the DMCA, was or wasn't fair use, et cetera.

  14            There was in my view no proper purpose to the end of

  15   that.  A good deal of effort was undertaken in what appeared

  16   to be an effort to provoke Mr. Valenti to answer, I don't

  17   know, to questions.  I'm not saying there was nothing relevant

  18   in there, but the percentage was very small.  The deposition

  19   in my view was principally an effort in the vernacular to

  20   score points.  It was not a quest for evidence or an effort to

  21   avoid surprise at trial.

  22            It may have great utility to the defendants in

  23   attempting to discredit Mr. Valenti and the MPA in the halls

  24   of Congress in making them look stupid to those people who are

  25   backers of the defendants' position in this case.  And it's a


   1   free country, the defense is entitled to portray or to try to

   2   portray the plaintiffs' position as silly or misinformed or to

   3   persuade Congress that it made a mistake.  What they are not

   4   entitled to do is use the processes of this Court to do so at

   5   least where there is not a bona fide litigation purpose for

   6   the effort which in my view in principal part there was not.

   7            Further to what has been going on in this case on

   8   part of defendants and their counsel is the following:  The

   9   defendants have a website on which they report on this

  10   lawsuit.  According to plaintiffs' June 23rd letter to the

  11   Court at page 3 Mr. Valenti's deposition was on the

  12   transcript, was posted on the website where the defendants

  13   commented on it.  I don't know exactly what they said.  I

  14   didn't look at it.  The defendants had a perfect right to do

  15   both.  Given the lack of any real litigation purpose for most

  16   of the Valenti deposition in the first place, however, it does

  17   suggest that there is at least as much interest in generating

  18   content and traffic for the website and in using the material

  19   generated by the lawsuit for broader public purpose than for

  20   the resolution of the legal and factual issues that are in

  21   dispute here.

  22            This point would not be complete without reference to

  23   the fact that defendants' counsel are obviously using their

  24   role in this lawsuit to secure personal press attention.  One

  25   need only look at exhibit E to Mr. Garbus' designation of May


   1   3rd which is docket item number 47 and Exhibits 3 and 6 to

   2   Mr. Howe's declaration which is docket item 84.

   3            Now don't get me wrong.  Self promotion is the great

   4   American way.  Given what the Supreme Court said a number of

   5   years ago I suppose lawyers are as entitled to do that as

   6   anybody else.  I certainly don't overlook the fact that the

   7   plaintiffs are certainly not shrinking violets in drawing

   8   press attention to this controversy.

   9            I certainly acknowledge also that there are times

  10   when litigation unavoidably generates material that can be

  11   used by litigants and their lawyers for purposes like that

  12   because the subject matter that's necessarily involved in the

  13   process of deciding a case lends itself to that purpose.

  14            Anybody who has been censured in the United States in

  15   the last couple of years can certainly think of lots of

  16   examples of that.  On the other hand, the processes of the

  17   courts do not exist for the purpose of generating content for

  18   the media that is not pertinent to resolving the lawsuits that

  19   are before them.  When that happens, courts can and should

  20   call a halt to it for some very simple reasons; the taxpayers

  21   who pay for these courts, the litigants who are made foils for

  22   those activities and the other litigants whose cases can't be

  23   heard while courts are occupied with nonsense of that type

  24   cannot fairly be asked to be economic end tables.

  25            Now, all of that brings me to the immediate questions


   1   that I have to decide this afternoon, the deposition of Mr.

   2   Eisner, and the trial date, and the trial date comes up only

   3   because the defendants want still more discovery.

   4            As far as Mr. Eisner is concerned, based on what I've

   5   said already, it is my view that it is quite likely that the

   6   deposition of Mr. Eisner if it is sought for a proper purpose

   7   in any respect in the main is not sought for a proper purpose

   8   if Mr. Valenti's deposition is any guide, and the defendants

   9   have offered me precious little basis for believing that it is

  10   not.  The primary purpose of the deposition is to argue with

  11   Mr. Eisner about the interpretation of the EMCA, to attempt to

  12   show that he's not personally a computer expert and to get him

  13   to say, I don't know, as many times as possible in order to

  14   produce an amusing transcript to put on the website and to

  15   attract more press attention.  I am not however prepared to

  16   ban the deposition of Mr. Eisner outright.  There is some

  17   possibility that he has information relevant and material to

  18   this case.

  19            I am not prepared to conclude simply on the basis of

  20   a representation by counsel that he does not.  In consequence

  21   I am going to allow that deposition to go forward, but it is

  22   limited to 90 minutes.  Absent a showing after the 90 minutes

  23   are done on the basis of the transcript that the defendants

  24   didn't waste the time they had and that they have bona fide

  25   basis to believe that continuing beyond 90 minutes is likely


   1   to produce anything of legitimate interest in the resolution

   2   of this dispute as opposed to interests in another forum.

   3            If these plaintiffs have exaggerated their position

   4   to the Congress to get the statute passed, if they have misled

   5   the public and the press about these issues, there are other

   6   forums for dealing with it, not this lawsuit.  If they have

   7   misled me and they lose the case, there will be ample

   8   opportunity after they fail to establish by proof what they

   9   claim, to seek sanctions and other remedies, if that's

  10   appropriate, but the time for that is not now.  It is later.

  11            Now, so far as the request for an adjournment is

  12   concerned, there is not going to be an adjournment of the

  13   trial.  First of all, the defendants have not used the time

  14   that has been available to them, which after all is since

  15   January, wisely.

  16            Now I know there was a change of counsel in February

  17   or March, depending on which version one accepts.  Clearly,

  18   however, nothing was done before the change of counsel,

  19   although the defendants were represented by counsel on the

  20   preliminary injunction motion.

  21            While Mr. Garbus obviously can't be faulted for doing

  22   nothing before he was in this case, the defendants can and to

  23   the extent that I have indicated they are.  Once Mr. Garbus

  24   was in the case whether it be mid-February or mid-March, the

  25   fact is that by May 11th, the day the notion of advancing the


   1   trial was broached, only eight depositions had been noticed

   2   and May 11th was the date that I was told that it looked like

   3   five depositions would do it.

   4            Virtually all of the depositions at issue here this

   5   afternoon on both sides were noticed only after the trial date

   6   was advanced.  I think it is clear that quite a number of the

   7   depositions noted by defendant have been noticed for the sake

   8   of noticing them in order to argue that the trial should be

   9   postponed, in any case, whatever the motivations, are not

  10   necessary in light of the needs of the case.

  11            Secondly, given what's gone on up until now I have

  12   little confidence to believe that more discovery would be

  13   directed in the main to the legitimate needs of this lawsuit

  14   as opposed to some of the other thing that have gone on here.

  15   I rather expect that the old saw about the work expanding to

  16   consume the available time at 10 percent on top applies here

  17   as well.

  18            Thirdly, I must say that some of the protestations

  19   that have been made here about discovery and other matters on

  20   behalf of defendants give me serious pause.  I have already

  21   mentioned the comments about needing only five depositions and

  22   now it's thirty.

  23            I was the recipient on May 8th of a motion by the

  24   defendants to raise the amount of injunction bond and for

  25   various kinds of relief on the basis of alleged discovery


   1   abuse by the plaintiffs.  That motion was frivolous in almost

   2   all respects for the reasons set out in my order of May 12th.

   3   Without cataloguing each and every respect in which that was

   4   so, I mention a few.

   5            Defendants argued that the MPA had improperly

   6   designated Messrs. Schuman and Jacobson to testify on its

   7   behalf because they were not officers, directors or managing

   8   agents of the MPA.  In fact, however, the rule that defendants

   9   proceeded under did not so require.

  10            Second, they complained that the defendants or the

  11   MPA had improperly failed to produce Mr. Eisner for his

  12   deposition.  In fact, no notice of deposition for Mr. Eisner

  13   ever had been served.

  14            Third, they complained that the plaintiffs had abused

  15   the process by failing to produce documents.  The thirty days

  16   allotted by rule for doing so had not yet expired.  The

  17   argument to raise the injunction bond was just plain silly.

  18            Lastly, the motion complained that the plaintiffs had

  19   failed to designate any witnesses to testify in their behalf

  20   pursuant to the defendants' 30(b)(6) motion.  They said that

  21   to me on a motion on May 8th for discovery when in fact on May

  22   5th, the Friday afternoon before the motion was presented to

  23   me, the plaintiffs had sent not one but two letters to

  24   defendants' counsel saying that they would designate witnesses

  25   early in the week, hopefully Monday.  So that the whole claim


   1   of abuse for failure to designate witnesses was at best

   2   premature and an imposition on the court.

   3            Now why make a motion like that?  It was absolutely

   4   doomed from the beginning.  I suggest the answer might be

   5   found in the press coverage.

   6            Now I could go on.  There was an argument made to me

   7   on May the 11th with a gallery of press people in the

   8   courtroom -- I certainly didn't call them -- about the impact

   9   of the Younger case in the 6th circuit.  One might look at the

  10   transcript of those proceedings at pages 2 through 3 and 39

  11   through 44.  I was told by the defendants in substance that

  12   the Younger decision eliminated the basis for my preliminary

  13   injunction ruling.  Not even a colorable argument.  It isn't

  14   even close to being a responsible legal argument.

  15            What the Younger decision in the sixth circuit said

  16   was that in their view computer source code is expressive and

  17   is entitled to First Amendment protection and it therefore

  18   sent back to the District Court a challenge to the export

  19   control regulation so that the District Court could draw an

  20   appropriate balance between the First Amendment interests in

  21   exporting the software, the source code at issue and the

  22   national security issues.

  23            With all due respect, that is substantially what I

  24   said in my decision.  I assumed for the purpose of argument

  25   that source code had Constitutional protection and that to


   1   balance it against the legitimate interests in securing

   2   protection for copyright.  To suggest that Younger eliminated

   3   the basis for the previous decision, which is obviously a

   4   relevant case, is simply a non-starter and yet the argument

   5   gets asserted.

   6            Why is that relevant?  Why is the motion relevant?

   7   It's relevant in my judgment at least in part, because I had a

   8   record before me of endless protests from the defendants about

   9   more and more discovery, five depositions, 14 depositions, 30

  10   depositions, and so many of the things that have been said to

  11   me have been insupportable up until now that I have no reason

  12   to suppose that there is much of a legitimate basis for much

  13   of what they are asking for.  They have been given every

  14   opportunity.  They had the opportunity to come in here this

  15   afternoon and make a showing of witness by witness of who

  16   these people were, what it is they want to question them

  17   about, why it is important or indispensable to preparing the

  18   case for trial.  They have not done it.  What I've got is a

  19   list of names and more assertions.

  20            Well, the time is over for that.  The case is going

  21   to trial.  It is a narrow case.  The discovery will be

  22   finished.  I will give a very brief additional extension on

  23   discovery, and you folks will get it done and you will be

  24   prepared, but it is going to trial on July 17th.  I'll give

  25   you until July 11th to finish discovery and anything you want


   1   to clean up.

   2            Now there was one more point.  Let me just see if I

   3   have my note on it.  I would add only this thought, the rules

   4   to which I referred earlier confer a lot of discretion on

   5   District Courts.  We need to manage cases.  We need to get

   6   them ready.  Lawyers come in and make arguments, they want

   7   delays, they want to speed up.  It is often extremely

   8   difficult to assess where to come out.  But the reason the

   9   discretion is conferred is because we all do this for a living

  10   everyday.  It is impossible, I think ultimately, to make these

  11   judgments without taking into account a feel about a case, not

  12   a view on which way the case ought to come out, but a feel

  13   about the way the lawyers are managing the case, informed by

  14   whatever experience we bring to the job when we come here

  15   which for most judges is considerable, and a sense from the

  16   interchange among counsel in a variety of ways, some of them

  17   objectively demonstrable like what they say in papers and

  18   letters, and some of it not.  I have brought that to bear

  19   here.

  20            The final point I want to make relates to what Mr.

  21   Hernstadt was saying earlier and which he really said that

  22   week ago in his letter of June 26th in which he was arguing

  23   for the Eisner deposition.  He said:  "In this regard what

  24   plaintiffs knew and know about the actual risk of piracy posed

  25   by DCCSS when they gained this knowledge, what they did to


   1   begin it, and what they did to eradicate the alleged risks are

   2   all facts very much at issue." I think that view is at the

   3   heart of the discovery disputes in this case.  It explains in

   4   a single sentence why all that time was spent in the Valenti

   5   deposition in the way it was and the positions taken here

   6   today with respect to the Eisner deposition, among other

   7   things, including the breadth of the discovery demands, the

   8   selection of witnesses whose depositions are sought.

   9            The simple fact of it is that in the main I couldn't

  10   disagree with the defense more.  The only respect in which any

  11   of the things that Mr. Hernstadt articulated in the sentence I

  12   quoted are germane to the resolution of this case in all

  13   likelihood is on the issue of whether there genuinely is any

  14   risk of harm.  The question of whether there genuinely is any

  15   risk of harm will be controlled predominantly by such matters

  16   as the quality of files encrypted with DCSS, the ability to

  17   transmit them in any reasonable span of time and matters such

  18   as that.  I don't mean to exclude other possibilities.  It may

  19   well be that there are other respects in which some of this is

  20   relevant, but for the most part I think it is not, and the

  21   inordinate discovery effort that defendants have mounted since

  22   this case was ordered to trial seems to be primarily directed

  23   at irrelevant issues, certainly issues relevant in the court

  24   of public opinion, certainly issues relevant in Congress, not

  25   issues relevant in this lawsuit.


   1            That is the ruling, and I will rule on the privilege

   2   matter as soon as I get the materials from the plaintiffs

   3   which better be quick.

   4            MR. SIMS:  Your Honor, may I be heard briefly on

   5   that?

   6            THE COURT:  Very briefly.

   7            MR. SIMS:  Here are the logs with respect to the

   8   plaintiffs other than Paramount and excluding the MPA.  There

   9   are a number of boxes that we got from the MPA.

  10            THE COURT:  So when am I going to get it?

  11            MR. SIMS:  Those additional two, the logs, I do not

  12   believe will be complete before the end of next week, your

  13   Honor.  There are nine boxes that came in within the last

  14   three days and we have had teams of lawyers working full time.

  15            THE COURT:  Get more teams.  I'm not waiting until

  16   the end of next week.

  17            MR. SIMS:  The other point I want to make, your

  18   Honor, is I think because of the procedure on this motion --

  19            THE COURT:  As for that I'm glad you mentioned that,

  20   because I left something out in my previous remarks.  I

  21   noticed from the letters that the defendants have insisted

  22   that no depositions go forward unless both Mr. Garbus and

  23   Mr. Hernstadt are present.  Now is that true, Mr. Hernstadt?

  24            MR. HERNSTADT:  No.

  25            THE COURT:  All right.  I'm glad to hear it.


   1   Moreover, they may be a big law firm, but you're no shrimps

   2   yourself.  You've got over forty lawyers in that firm, and if

   3   the reason you're not getting any depositions is because you

   4   and/or Mr. Garbus have to be there all the time, and I'm not

   5   asking for any answer, the time has come to reconsider that

   6   point of view.

   7            When am I getting the documents, Mr. Sims?

   8            MR. SIMS:  Your Honor, if you want, and I suggest

   9   that you might not, and I'd like to explain why, but if you

  10   want the documents that accompany those logs we will have them

  11   to you tomorrow.

  12            THE COURT:  Why wouldn't I want that other than

  13   common sense?

  14            MR. SIMS:  Because the way the procedure has happened

  15   here those logs, I don't believe that everything on those logs

  16   or nearly everything on those logs is in fact in dispute.  In

  17   fact, I believe based on the briefing that what's in dispute

  18   are relatively narrow categories and if your Honor wants the

  19   nine hundred documents that pertain to those and the other, it

  20   will be more than a thousand, more than another thousand,

  21   maybe more than two thousand with remaining logs, we're glad

  22   to give them to you, but in fact I believe --

  23            THE COURT:  Does that seem relatively few?

  24            MR. HERNSTADT:  I have no idea.  I don't know what's

  25   in those documents and the logs are not containing the


   1   necessary details I've been able to determine.  The logs say

   2   stuff like DCSS --

   3            THE COURT:  How can you say to Mr. Sims that he

   4   doesn't dispute it?

   5            MR. SIMS:  Well in the briefing I mean there have

   6   been opportunities in the depositions and in conversation and

   7   the briefing.  As I understand it what's fundamentally at

   8   issue are the documents concerning the investigation

   9   undertaken after the act was undertaken and communications

  10   between Mr. Litvack representing MPA and Weil Gotshal

  11   representing DCCA again in the post-act period, and they've

  12   had the Warner log for some two and a half weeks.  I believe

  13   it's more than clear enough and ample enough under the

  14   standards of this district for them to have made

  15   particularized discovery.

  16            THE COURT:  Here is what we are going to do.  In the

  17   next thirty hours you and Mr. Hernstadt are sitting down in a

  18   room together somewhere with these logs, and at the end of the

  19   thirty hours you are going to produce to me all the documents

  20   that have to be looked at and if that's a thousand documents,

  21   it's a thousand documents, and if you can somehow narrow it, a

  22   blessing on both your heads.

  23            MR. SIMS:  Yes.

  24            MR. HERNSTADT:  Your Honor, may I make one request?

  25            THE COURT:  Yes.


   1            MR. HERNSTADT:  The last time we were here before you

   2   went through about seven or eight people that we felt

   3   particularly depositions were needed and explained that none

   4   of the other depositions were conditional on what they had to

   5   say.  In fact, most of them probably could be ascertained

   6   based on those seven or eight people.  If we could get those

   7   depositions notwithstanding the fact that you think us

   8   completely wrong headed, but I think --

   9            THE COURT:  I didn't say completely wrong headed.

  10   You weren't listening.

  11            MR. HERNSTADT:  I'm sorry, sir, partly.  If you could

  12   direct these plaintiffs to make those people available in that

  13   twelve days or fourteen days we have to complete discovery I

  14   think that -- we haven't been able to get dates for that.

  15            THE COURT:  You think what?  You think that solves

  16   your problem?

  17            MR. HERNSTADT:  I think that gives us some procedure

  18   or of ability to prepare properly for trial.

  19            THE COURT:  Who are they?

  20            MR. HERNSTADT:  Michelle Ryder, Liz Hersch, Greg

  21   Eisner, Brad Hunt, Ethan Marx, Mark Litvack, and Michael

  22   Ostroff, and then --

  23            THE COURT:  You're up to the ninth of your six or

  24   seven.

  25            MR. HERNSTADT:  I'm sorry.  And Mr. Schuman and if I


   1   have to trim that --

   2            THE COURT:  What do you want from Reiner?  What is

   3   she going to testify to?

   4            MR. HERNSTADT:  She is going to testify about the

   5   technical capacities of DCSS.  She is part of the team at the

   6   MCC.  She is supposed to be the head of the antipiracy group.

   7   She deals with technical questions.

   8            THE COURT:  Is she a lawyer or a tekkie?

   9            MR. HERNSTADT:  She's a tekkie.

  10            THE COURT:  You know lawyers don't know anything

  11   about this stuff.

  12            MR. HERNSTADT:  Of course not, that's why we need

  13   these tech people.  Spear is also a tech person.  I believe

  14   her deposition will be a brief one, not just because she's --

  15            THE COURT:  Hirsch?

  16            MR. HERNSTADT:  The antipiracy chief before Jacobson

  17   up until April 1 when Jacobson took over.  In other words, the

  18   first six months.

  19            THE COURT:  Deckner?

  20            MR. HERNSTADT:  Deckner is an MPA lawyer.  He's the

  21   one who said publicly we don't have any evidence of.

  22            THE COURT:  You think you're going to improve on

  23   that?

  24            MR. HERNSTADT:  We can reconsider that but I'd like

  25   know why he said that what he based it on.


   1            THE COURT:  He made it up to help you.

   2            MR. HERNSTADT:  That would be good.

   3            THE COURT:  What about Hunt?

   4            MR. HERNSTADT:  Hunt is the key technical officer for

   5   the MPA.

   6            THE COURT:  Marx?

   7            MR. HERNSTADT:  Dean Marx is one of the plaintiffs,

   8   plaintiff's offered him in place, put declaration on the

   9   original motion.

  10            THE COURT:  What does he have to say?  Mark Litvack?

  11            MR. HERNSTADT:  He is here.  He is counsel for the

  12   MPA and in the privilege motion his role in what we would like

  13   to talk to him about.

  14            THE COURT:  Michael Ostroff?

  15            MR. HERNSTADT:  Michael Ostroff is someone who can

  16   talk about DDDIO.  He's the music recording portion of one of

  17   the plaintiffs.

  18            THE COURT:  You think that's a little collateral?

  19            MR. HERNSTADT:  To one of extent that's one of the

  20   harms they alleged.  We've learned that it wasn't.

  21            THE COURT:  So what?  That's a question.  So what

  22   with a question mark.

  23            MR. HERNSTADT:  Okay.  So what the reason they're

  24   saying that that is the extent of the harm the damages that

  25   are caused by DCSS the threat of DCSS is so great that an


   1   entire format has been postponed.  I think that's relevant

   2   because it's not true and that's a harm that doesn't exist.

   3            THE COURT:  Mr. Sims, what do you say to the list?

   4            MR. SIMS:  I defer to Mr. Litvack.

   5            MR. LITVACK:  Thank you very much.  Your Honor,

   6   starting with myself, which is probably the one I know the

   7   best, I am an attorney for the Motion Picture Association of

   8   America.  That is my job function.  Mr. Getner is our deputy

   9   general counsel.

  10            THE COURT:  Keep going.

  11            MR. LITVACK:  Miss Widner's testimony is only acting

  12   under my direction in this matter.  She is somebody in our

  13   group who work for me on this matter.  She is not somebody we

  14   would go to ask teckie questions of.  She is part of our

  15   investigative Internet investigative staff and worked under

  16   me.

  17            THE COURT:  What about Hirsch?

  18            MR. LITVACK:  Mr. Hirsch at the time, first of all,

  19   Mr. Hirsch is also a member of this bar, your Honor, so he did

  20   operate in all honesty as the head of our Internet piracy

  21   operations.  If you look at the questions here there is

  22   nothing that Mr. Jacobson said, gee, that might have happened

  23   earlier and I don't know about it, but to the extent they want

  24   to depose Mr. Hirsch, I guess it's a fair game.  I would

  25   suggest to your Honor that once again most of this


   1   conversations, if not all of them, are with counsel,

   2   specifically myself because we went over this.  I guess

   3   they're free to ask.

   4            THE COURT:  What about Hunt?

   5            MR. LITVACK:  Mr. Hunt is the chief technology

   6   officer of our organization, your Honor, some of this

   7   conversations with regard to these particular matters they all

   8   would have been with me as regard to any possible fixes to the

   9   problem we would have a totally separate confidentiality

  10   problem.

  11            THE COURT:  What about Marks?

  12            MR. LITVACK:  Put in an affidavit for Warner

  13   Brothers.  Mr. Marks is the substitute for her.  We will

  14   present, produce Mr. Marks.

  15            THE COURT:  Linda Sheer?

  16            MR. LITVACK:  Linda sheer, your Honor, she is a

  17   techie on our staff and investigative staff.  Your Honor, we

  18   have agreed to make Ms. Sheer available.  We have asked that

  19   they do it in California.  Ms. Sheer is very, very ill.  We

  20   told them at the time two or three weeks ago she was in the

  21   hospital for a week.  She has a doctor's note that says she

  22   cannot travel but within that we can make her available either

  23   via telephone or since they agreed to go to California for Mr.

  24   Eisner, we can do it in coordination with that.

  25            THE COURT:  I am going to direct that the plaintiffs


   1   make available within the time frame Hirsch, Hunt, Marks,

   2   Sheer in California, if the defendants want her, and Ostroff.

   3            I am not going to rule now on Mr. Litvack, Mr. Getner

   4   or Ms. Rider.  I gather, Mr. Hernstadt, that if I wind up

   5   sustaining the privilege objection those are out anyway, am I

   6   right?

   7            MR. HERNSTADT:  Put it this way, I think we could

   8   probably handle what we want with those two.  Mr. Litvack has

   9   also made a number of public statements, but we can probably

  10   dispose of that in a different way.  Ms. Rider, Mr. Jacobson

  11   testified that she worked for him.  That may be just

  12   semantics.

  13            THE COURT:  You get her, too.  Obviously there may be

  14   some privilege objection but I'm not ruling on those now.  Can

  15   you get those -- Mr. Gold, you look like you're very

  16   uncomfortable.

  17            MR. GOLD:  No, your Honor, I'm not.

  18            THE COURT:  God forbid.  I was concerned.  I'm glad

  19   to hear you're not.  I'm not excluding the others, but if you

  20   people can work out the others, but the clock is going to

  21   stop.  You know you're playing the Pacers and the 24 seconds

  22   are going to be up, and it's going to be over.

  23            MR. GOLD:  Your Honor, may I stand up for a few

  24   questions on depositions we want to take.

  25            THE COURT:  People that are going to testify.


   1            MR. GOLD:  The experts they are going to put on the

   2   stand that's all, but I need them to tell me in all good faith

   3   the experts they intend to put on the witness stand.  Then I

   4   will take only those people and none other.

   5            THE COURT:  You've got to tell him, Mr. Hernstadt,

   6   soon.

   7            MR. GOLD:  Can you tell me by the end of the week?

   8            MR. HERNSTADT:  Yes.

   9            MR. GOLD:  Thank you.

  10            THE COURT:  All right.  Our business is done.  Anna

  11   tells me our business isn't done.  The conference on July 12th

  12   is advanced to 2 p.m.

  13            MR. HERNSTADT:  Your Honor, one last -- never mind.

  14            THE COURT:  You thought better of it.

  15            MR. HERNSTADT:  Yes.  You already stood up.

  16            THE COURT:  That's all right.

  17            MR. HERNSTADT:  One stickier matter.

  18            THE COURT:  I thought were you following Rifkin's

  19   rule.

  20            MR. HERNSTADT:  Which is?

  21            THE COURT:  Late Judge Rifkin kin always used to tell

  22   me when you got pretty much what you want, get out of the

  23   courtroom before the Judge changes his mind.

  24            MR. HERNSTADT:  I just ask if we can be excused now.

  25            THE COURT:  You can be excused.