DVD Copy Control Ass'n Inc. v. Bunner
116 Cal. App. 4th 241, 69 U.S.P.Q. 2d (BNA) 1907, 10 Cal. Rptr. 3d 185 (2004)
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Rule of Law:
Widespread publication of information on the internet may destroy its status as a trade secret under the Uniform Trade Secrets Act (UTSA), precluding the issuance of a preliminary injunction against further disclosure if the plaintiff cannot demonstrate the information remains secret and that it will suffer interim harm from the defendant's specific disclosure.
Facts:
- Motion picture companies developed a Content Scrambling System (CSS) to encrypt and protect movies on Digital Versatile Disks (DVDs) from unauthorized copying.
- DVD Copy Control Association, Inc. (DVD CCA) was formed to manage a restrictive licensing scheme for CSS, requiring manufacturers to agree to maintain the confidentiality of the technology and prohibiting reverse engineering.
- Sometime in October 1999, a computer program named DeCSS, which circumvents CSS protection, appeared on the internet.
- DVD CCA alleged DeCSS was created by Jon Johansen, a resident of Norway, by reverse engineering software from a licensee, Xing Technology Corporation, in breach of the license agreement.
- DeCSS rapidly spread across numerous websites, and by early November 1999, internet news magazines were publicizing the program and its availability for download.
- Andrew Bunner, a supporter of the Linux operating system, became aware of DeCSS around October 26, 1999, and posted the program on his website.
- Following the initial publication of DeCSS, a campaign of civil disobedience arose in the computer programming community to spread the code as widely as possible through websites, t-shirts, and flyers.
Procedural Posture:
- DVD Copy Control Association, Inc. (DVD CCA) sued Andrew Bunner and others in California trial court, seeking an injunction under the Uniform Trade Secrets Act (UTSA).
- The trial court granted DVD CCA's request for a preliminary injunction, which prohibited Bunner from posting or distributing the DeCSS program.
- Bunner, as appellant, appealed the injunction to the California Court of Appeal, arguing it violated his constitutional free speech rights.
- The Court of Appeal initially agreed with Bunner and reversed the injunction, finding it to be an unconstitutional prior restraint on speech.
- The California Supreme Court granted review. It held that the injunction was not an unconstitutional prior restraint if it was properly issued under California's trade secret law.
- The California Supreme Court remanded the case back to the Court of Appeal to determine whether the factual record supported the trial court's finding that the preliminary injunction was warranted under the UTSA.
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Issue:
Does the widespread and rapid publication of an alleged trade secret on the internet negate the secrecy element required for a preliminary injunction under the Uniform Trade Secrets Act, when the plaintiff fails to show that the information was still a secret at the time of the defendant's posting and that they would suffer further harm from its disclosure?
Opinions:
Majority - Premo, Acting P. J.
Yes. A preliminary injunction is improper because widespread publication on the internet can destroy an information's status as a trade secret. To obtain a preliminary injunction under the UTSA, a plaintiff must show both a likelihood of success on the merits and that the balance of interim harms weighs in its favor. A critical element of a trade secret is that it is, in fact, secret—meaning not generally known. In this case, DVD CCA failed to produce evidence showing that the CSS technology contained in DeCSS was still a secret at the time Bunner posted it. The record demonstrated that by the time DVD CCA filed its lawsuit, DeCSS had been posted on hundreds of websites and had been widely publicized and republished to an eager worldwide audience, making it generally available. Because the information was likely no longer secret, DVD CCA could not show a likelihood of success on its misappropriation claim. Furthermore, an injunction prohibiting disclosure serves no purpose if the secret is already lost, meaning DVD CCA could not demonstrate the requisite interim harm from Bunner's individual posting. Since the injunction was not justified under the UTSA, it constituted an unlawful prior restraint on Bunner's free speech rights.
Analysis:
This case illustrates the profound challenge the internet poses to traditional trade secret law. The court's decision establishes that the speed and scope of online dissemination can effectively and permanently destroy a trade secret before a legal remedy, like an injunction, can be obtained. It signifies that once information is widely available in the public domain online, courts may be powerless to 'un-ring the bell' by enjoining further disclosure, even if the information was initially acquired by improper means. This precedent places a heavy burden on trade secret holders to act with extreme speed to contain a leak online, as a delay may result in the complete loss of the secret and the inability to secure injunctive relief.
