DVD Copy Control Ass'n, Inc. v. Bunner
4 Cal. Rptr. 3d 69, 75 P.3d 1, 31 Cal. 4th 864 (2003)
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Rule of Law:
A preliminary injunction prohibiting the disclosure of computer code that constitutes a trade secret, which was acquired by improper means and whose disclosure is not a matter of public concern, does not violate the First Amendment or the California Constitution's free speech provision if it is content-neutral, addresses prior unlawful conduct, and burdens no more speech than necessary to serve significant government interests in protecting intellectual property and commercial ethics.
Facts:
- Digital versatile discs (DVDs) were developed to hold full-length motion pictures in digital form, offering improved audio and visual clarity but also creating a risk of perfect, widespread digital copies.
- The motion picture, computer, and consumer electronics industries adopted the Content Scrambling System (CSS) to encrypt copyrighted content on DVDs and prevent unauthorized copying and transmission.
- Companies licensing the CSS technology agreed to maintain the confidentiality of proprietary information, including the master keys and algorithms, which were part of the CSS system.
- Jon Johansen, a Norwegian resident, acquired the proprietary information of CSS by reverse engineering software created by Xing Technology Corporation, a licensee whose software license specifically prohibited reverse engineering.
- Johansen then wrote a program called DeCSS that decrypts movies stored on DVDs and enables users to copy and distribute these movies, subsequently posting its source code on an Internet website in October 1999.
- Andrew Bunner posted the DeCSS source code on his Internet website, stating his reasons included enabling 'Linux' users to play DVDs and allowing programmers to improve the DeCSS program.
- The DVD Copy Control Association, Inc. (DVD CCA), the entity administering CSS licenses, viewed DeCSS as embodying or being derived from its confidential proprietary CSS technology and made extensive efforts to identify websites disclosing it.
Procedural Posture:
- DVD CCA filed an action against Bunner and numerous other named and unnamed individuals who had published or linked to websites publishing DeCSS, alleging trade secret misappropriation.
- DVD CCA filed an ex parte application for a temporary restraining order (TRO), which the trial court denied.
- The trial court issued an order to show cause for a preliminary injunction.
- Following a hearing and consideration of written declarations, the trial court issued a preliminary injunction enjoining the named defendants, including Bunner, from posting or disclosing the DeCSS program or proprietary CSS information.
- Bunner appealed the preliminary injunction to the Court of Appeal.
- The Court of Appeal reversed, holding that the preliminary injunction, even if justified under California’s trade secret law, violated the First Amendment as an invalid prior restraint on pure speech.
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Issue:
Does a preliminary injunction prohibiting the disclosure of computer code that constitutes a trade secret, which was acquired by improper means and whose disclosure is not a matter of public concern, violate the First Amendment or the California Constitution's free speech provision?
Opinions:
Majority - Brown, J.
No, the preliminary injunction does not violate the free speech clauses of the United States and California Constitutions. Computer code, including DeCSS, is a form of speech protected by the First Amendment. However, the injunction is content-neutral because its purpose is to protect DVD CCA's property interest in trade secrets, not to suppress the content of Bunner's communications or disagree with his message. The injunction singles out communications due to their illegal acquisition, not their subject matter, and serves the governmental purposes of California's trade secret law, which promotes and rewards innovation and maintains commercial ethics. Content-neutral injunctions are reviewed under the Madsen test, which asks whether the injunction burdens no more speech than necessary to serve a significant government interest. Protecting trade secrets serves significant government interests by (1) incentivizing investment in innovation and allowing owners to reap the fruits of their labor, and (2) maintaining commercial ethics by prohibiting the exploitation of valuable, proprietary information acquired by improper means. The injunction burdens no more speech than necessary because preventing disclosure of improperly acquired trade secrets is the only way to preserve their property value, and it applies a long-standing standard of commercial ethics against knowingly exploiting stolen property. Bartnicki v. Vopper is distinguishable because it concerned information of public concern, whereas DVD CCA's trade secrets involve technical information of purely private concern, not matters of public importance. The First Amendment interests in disclosing such private information are less significant. Furthermore, the injunction is not an unconstitutional prior restraint because it is content-neutral and was issued due to Bunner's prior unlawful conduct (misappropriation of trade secrets), not as government censorship prior to an adequate determination that the speech is unprotected. The court's finding that DVD CCA was likely to succeed on the merits and that Bunner engaged in prior unlawful conduct is sufficient to render the heavy presumption against prior restraints inapplicable. The California Constitution's free speech provision, affording similar protection, leads to the same conclusion. The court reverses the Court of Appeal's judgment and remands, directing the Court of Appeal to conduct an independent review of the factual findings necessary to establish that the preliminary injunction was warranted under California's trade secret law, given the First Amendment issues involved.
Concurring - Werdegar, J.
I agree with the majority's conclusion that the First Amendment does not necessarily preclude injunctive relief in trade secret cases. I find Justice Moreno’s concurring opinion offers a more satisfying reconciliation of this conclusion with the constitutional rules governing prior restraints and content-based restrictions of speech. While a reviewing court in First Amendment cases must independently examine the entire record, I agree with the majority’s decision to leave this factually intensive task to the Court of Appeal for reasons of judicial economy.
Concurring - Moreno, J.
I concur in the majority’s narrow holding that the First Amendment does not categorically prohibit preliminary injunctions to enjoin the publication of trade secrets and that independent appellate review of such injunctions is required. However, I believe preliminary injunctions against alleged trade secret publications are subject to prior restraint analysis because they involve subject-matter censorship prior to a final adjudication on the merits that the speech is unprotected, unlike time, place, and manner regulations. To overcome the heavy presumption against prior restraints, a plaintiff should be required to actually establish a likelihood of prevailing on the merits, rather than merely showing that questions of law or fact are grave and difficult. While preliminary injunctions may be necessary to protect trade secret property rights, this heightened standard and independent appellate review are crucial for safeguarding First Amendment rights. Although the majority arrives at a similar practical outcome regarding independent review, my analytical path differs. I would have affirmed the Court of Appeal's judgment without remand, concluding as a matter of law that DVD CCA has no likelihood of prevailing on the merits. The DeCSS information was not demonstrably secret when Bunner republished it; numerous websites had already posted it. Information widely available on the internet, like in trade journals, is 'readily ascertainable' and therefore no longer a trade secret. The trial court failed to make particularized findings that the information was still secret at the time Bunner republished it. Furthermore, the acquisition of the secret by reverse engineering, without allegations of unlawful acquisition of the product itself, may not constitute 'improper means' as defined by statute, and 'click license' agreements should not unilaterally redefine statutory terms. Speedy resolution of First Amendment cases is desirable, and further delay would burden protected speech.
Analysis:
This case is highly significant for intellectual property law, particularly trade secret protection, and First Amendment jurisprudence in the digital age. It clarifies that injunctions against trade secret misappropriation, even when involving expressive computer code, can be found content-neutral and permissible under the First Amendment if they stem from prior unlawful conduct and protect private information, rather than censoring public discourse. The California Supreme Court’s application of the Madsen test for content-neutral injunctions and its emphasis on independent appellate review of underlying factual findings in First Amendment cases provides a crucial framework for balancing these competing rights. Justice Moreno's concurrence highlights the potential tension between the court's prior restraint analysis and the rapid dissemination of information online, which could impact how 'secrecy' and 'improper means' are defined for trade secrets in future cases involving digital distribution. This decision reinforces the protection of proprietary information while mandating rigorous judicial scrutiny when such protection might impinge on free speech.
