New Technology Cases Update

A Manhattan federal district court granted a request by film studios for a preliminary injunction against a distributor of DeCSS software that enabled users to de-encrypt DVD anti-copying protection. Paramount Pictures Corp. v. 321 Studios, 03-CV-8970. The studios had filed suit under the Digital Millenium Copyright Act (DMCA). In issuing the injunction, the district court noted that both it and the U.S. Court of Appeals for the Second Circuit, in which the district court resides, had enforced a permanent injunction against similar software offered for free over the Internet. Universal City Studios Inc. v. Reimerdes, 111 F. Supp.2d 294; Universal City Studios Inc. v. Corley, 273 F.3d 429. 321 Studios offered its software for commercial sale. But the defendant argued that its software wasn't primarily designed for de-encryption circumvention and could be used to restore damaged DVDs. The district court emphasized, however, that “prohibition of manufacture or trafficking of any technology primarily designed to circumvent a technological measure that either controls access to or protects a right of a copyright owner to or in a work protected under the DMCA, obviously is not evaded by the existence of arguably limited alternative uses.” The district court also denied the defendant's motion to transfer the case to the Northern District of California because that court had already issued an injunction against 321 Studio.

The Court of Appeal of California, Sixth Appellate Division, ruled that evidence was insufficient to support a preliminary injunction under California's Uniform Trade Secrets Act, Calif. Civ. Code Sec. 3426 et al., against the use or publication of DeCSS DVD de-encryption software. DVD Copy Control Association Inc. (DVD CCA) v. Bunner, H021153. The trial court had granted the plaintiff's motion for a preliminary injunction, but the court of appeal reversed on prior restraint grounds. The California Supreme Court determined that a preliminary injunction didn't violate the defendant's free speech rights if properly issued under state trade secrets law, then remanded the case. Again reversing the injunction, the court of appeal noted, “DVD CCA presented no evidence as to when [defendant] Bunner first posted DeCSS and no evidence to support the inference that the CSS technology was still a secret when he did so. Further, there is a great deal of evidence to show that by the time DVD CCA sought the preliminary injunction prohibiting disclosure of the DeCSS program, DeCSS had been so widely distributed that the CSS technology may have lost its trade secret status. There is no evidence at all to the contrary. … The preliminary injunction, therefore, burdens more speech than necessary to protect DVD CCA's property interest and was an unlawful prior restraint upon Bunner's right to free speech.”

The U.S. District Court for the Southern District of New York ruled that the peer-to-peer file sharing service iMesh.com was subject to personal jurisdiction in New York. Motown Record Co. L.P. v. iMesh.com Inc., 03-7339. Several record companies filed suit against iMesh.com and iMesh (Israel) alleging copyright infringement. The defendants moved to dismiss, among other things, for lack of personal jurisdiction, on the ground that Israel was a more convenient forum and because the case should be transferred to California, where similar claims by the plaintiffs were pending against other entities. The district court denied the motions, first finding that iMesh.com had a systematic and continuous basis in New York because it “repeatedly held itself out to governmental authorities and to third parties as being physically present in New York. …, [T]he absence of owned or leased office space or a telephone listing in New York is not very significant in the context of such affirmative representations of New York residency. This is particularly so with an on-line Internet service which has few employees and little physical presence anywhere in the world.” iMesh.com also used a New York bank as its sole entity for financial transactions, as did iMesh (Israel) which the court found was treated as a “mere department” by iMesh.com. On the forum issue, the district court noted that iMesh.com failed to address whether an Israeli court could hear U.S. copyright claims by U.S.-based entities such as the record labels. The district court also refused to transfer the case to California because the principal places of business for most of the plaintiffs were in New York.

DVD De-Encryption ' DMCA