321 Studios loses DVDxCopy Court Case
February 19, 2004 - In an important case for the DVD industry, a Federal
Judge has declared that 321 Studios must stop selling DVDxCopy. The judge
agreed with the Movie Studios that selling DVDxCopy violates the Digital
Millennium Copyright Act (DMCA). The judge also upheld the
constitutionality of the DMCA, as was done in two earlier cases involving Corley
(who posted DeCSS code on the 2600.com website) and Elcom (makers of a product
which defeated Adobe's eBook technology).
The most interesting point made by the decision is that using DVDxCopy
or similar software that defeats copy protection systems is not illegal.
It is, however, illegal for any person to "manufacture, import, offer to the
public, provide, or otherwise traffic in" these tools.
The complete text of the court decision is provided below...
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
321 STUDIOS,
Plaintiff,
v.
METRO GOLDWYN MAYER STUDIOS,
INC., et al.,
Defendants.
______________________________________
AND RELATED COUNTERCLAIMS.
No. C 02-1955 SI
ORDER GRANTING DEFENDANTS’
MOTION FOR PARTIAL SUMMARY
JUDGMENT AND RESOLVING
RELATED MOTIONS
Presently before the Court are defendant/counterclaimants’ motion for partial
summary judgment, and various accompanying motions. Having carefully considered
the arguments of counsel and the papers submitted, the Court hereby GRANTS
defendant/counterclaimants motion for partial summary judgment; GRANTS plaintiff
Victor Mattison’s motion to dismiss defendants’ counterclaims; DENIES
plaintiff’s motion for denial or continuance of motion for summary judgment
pursuant to Rule 56(f); GRANTS Electronic Frontier Foundation’s and Copyright
Law Professors’ motion for leave to file amici briefs in opposition to
defendants’ motion for summary judgment; DENIES plaintiff’s motion for leave to
amend answer to counterclaim; GRANTS Larry Davis’ motion to intervene as
plaintiff; and GRANTS defendants’ motion for judicial notice, for the reasons
set forth below.
BACKGROUND
A digital versatile disc (DVD) is a five inch wide plastic disk that stores
digital information. Moore Decl., 2 n.1; Schumann Decl., 7. DVDs currently make
up 39% of the sales of video and film works. Schwerin Decl. 3. Many films are
sold only in the DVD format. Moore Decl. 25; Schwerin Decl., 4. This format
allows bonus features, such as alternate endings, deleted scenes, video games,
alternate viewing configurations, commentary from directors and actors, and
other menu-driven options, that are not available on VHS tapes or any other
format. Moore Decl. 26-30; Schwerin Decl., 7; Touretsky Decl., 9; Schumann Decl.,
18.
Many DVDs store the digital data in a format called the Contents Scramble System
or CSS. The Copyright Control Authority administers the CSS encoding scheme and
the licensing of the electronic keys used by DVD players to playback DVDs. Moore
Decl. 10-11; Schumann Decl., 12-14. The 31 CSS keys and the algorithm that can
be used to decode a DVD are broadly available on the Internet. Touretsky Decl.,
7, 11, 14, 22, 24; Schumann Decl., 22.
Plaintiff 321 Studios, LLC is a company that markets and sells software and
instructions for copying DVDs. First Amended Complaint 1, 23, 26, 28, 29; Moore
Decl., 2-4. 321 sells two products: DVD Copy Plus, which began selling in August
2001, and DVD-X COPY, which began selling in November 2002. Moore Decl. 2, 5.
DVD Copy Plus consists of an electronic guide explaining how to create backup
copies of DVDs, two pieces of free, publicly available software, and one CD
burning application, PowerCDR, licensed from a German company. Moore Decl. 2.
DVD Copy Plus copies video content from original DVDs regardless of whether they
are encoded with CSS. Moore Decl. 3. The software does not create an identical
copy of the DVD; rather it allows the user to copy a portion of the video
contents on the DVD onto a recordable CD. Moore Decl. 3. DVD-X COPY requires the
user to have a DVD drive that is capable of reading and writing data to blank
DVD media. Moore Decl. 5. DVD-X COPY reads the data on the original DVD, decodes
it, and then uses the data to create a backup copy of the DVD. Moore Decl. 6.
This data is read by the DVD drive, decrypted by the DVD-X COPY software, and
then stored on the computer (either in RAM or on the hard drive) until the
backup copy of the DVD is created. Id. Once the backup copy is created, the
stored data from the original DVD is automatically deleted. Id. If the DVD is
encoded with CSS, DVD-X COPY uses a CSS player key to access the data; DVD-X
COPY also contains publicly known computer code that performs the algorithms to
decode the DVD data. Moore Decl. 8. DVD-X COPY does not affect the encryption on
the original DVD. Moore Decl. 9.
Plaintiff 321 Studios filed a complaint for declaratory relief on April 22,
2002, seeking, in Claim One, a declaratory judgment from this Court that its
activities in distributing DVD Copy Plus and DVD-X COPY do not violate the
provisions of the [Digital Millenium Copyright Act, DMCA] or, in the
alternative, that these provisions are invalid in light of other copyright law
provisions, these provisions are invalid because Congress exceeded its
enumerated powers under Article 1, Section 8, of the United States Constitution,
these provisions are unconstitutionally vague, and/or these provisions violate
the First Amendment of the Constitution. FAC 44. Claim Two seeks a declaratory
judgment from this Court that its distribution of DVD Copy Plus and DVD-X COPY
do not violate the Copyright Act on the grounds that DVD Copy Plus and DVD-X
COPY have substantial non-infringing uses, that the use of DVD Copy Plus and
DVD-X COPY constitute fair use, and/or that the provisions of the Copyright Act,
if interpreted to bar the distribution of DVD Copy Plus and DVD-X COPY, violate
the First Amendment of the Constitution. FAC 49.
Most defendants (the Studios) are members of the Motion Picture Association
of America (MPAA). They are owners of copyrights in motion pictures, and produce
and/or distribute DVDs that contain the copyrighted material. The United States
was granted intervenor-defendant status on August 12, 2002 and limits its
involvement to plaintiff’s claims regarding the validity of the DMCA.
Now before the Court are defendant/counterclaimants’ motion for partial
summary judgment, plaintiff Victor Mattison’s motion to dismiss defendants’
counterclaims, plaintiff’s motion for denial or continuance of motion for
summary judgment pursuant to Rule 56(f), Electronic Frontier Foundation’s and
Copyright Law Professors’ motion for leave to file amici briefs in opposition to
defendants’ motion for summary judgment, plaintiff’s motion for leave to amend
answer to counterclaim, Larry Davis’ motion to intervene as plaintiff, and
defendants’ request for judicial notice.
LEGAL STANDARD
A. Summary judgment
The Federal Rules of Civil Procedure provide for summary adjudication when the
pleadings, depositions, answers to interrogatories, and admissions on file,
together with affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a matter of
law. Fed. R. Civ. P. 56(c).
In a motion for summary judgment, [if] the moving party for summary judgment
meets its initial burden of identifying for the court those portions of the
materials on file that it believes demonstrate the absence of any genuine issues
of material fact, the burden of production then shifts so that the non-moving
party must set forth, by affidavit or as otherwise provided in Rule 56,
‘specific facts showing that there is a genuine issue for trial.’ See T.W. Elec.
Service, Inc. v. Pacific Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir.
1987) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct. 317 (1986)).
In judging evidence at the summary judgment stage, the Court does not make
credibility determinations or weigh conflicting evidence, and draws all
inferences in the light most favorable to the nonmoving party. See T.W.
Electric, 809 F.2d at 630-31 (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith
Radio Corp., 475 U.S. 574, 106 S. Ct. 1348 (1986)); Ting v. United States, 927
F.2d 1504, 1509 (9th Cir. 1991). The evidence presented by the parties must be
admissible. Fed. R. Civ. P. 56(e). Conclusory, speculative testimony in
affidavits and moving papers is insufficient to raise genuine issues of fact and
defeat summary judgment. See Falls Riverway Realty, Inc. v. City of Niagara
Falls, 754 F.2d 49 (2d Cir. 1985); Thornhill Publ’g Co., Inc. v. GTE Corp., 594
F.2d 730, 738 (9th Cir. 1979). Hearsay statements found in affidavits are
inadmissible. See, e.g., Fong v. American Airlines, Inc., 626 F.2d 759, 762-63
(9th Cir. 1980).
B. Motion to dismiss
Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a
complaint if it fails to state a claim upon which relief can be granted. The
question presented by a motion to dismiss is not whether the plaintiff will
prevail in the action, but whether the plaintiff is entitled to offer evidence
in support of the claim. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974),
overruled on other grounds by Davis v. Scherer, 468 U.S. 183, 104 S. Ct. 3012
(1984).
In answering this question, the court must assume that the plaintiff's
allegations are true and must draw all reasonable inferences in the plaintiff's
favor. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). Even
if the face of the pleadings suggests that the chance of recovery is remote, the
Court must allow the plaintiff to develop the case at this stage of the
proceedings. See United States v. City of Redwood City, 640 F.2d 963, 966 (9th
Cir. 1981).
If the court dismisses the complaint, it must then decide whether to grant leave
to amend. The Ninth Circuit has repeatedly held that a district court should
grant leave to amend even if no request to amend the pleading was made, unless
it determines that the pleading could not possibly be cured by the allegation of
other facts. Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (citations and
internal quotation marks omitted).
C. Rule 56(f)
Rule 56(f) of the Federal Rules of Civil Procedure provides that, upon a showing
by the party opposing a motion for summary judgment that it "cannot for reasons
stated present by affidavit facts essential to justify the party's opposition,"
the court may deny or continue the motion for summary judgment in order to
permit that party an opportunity to obtain necessary discovery. "Ordinarily,
summary judgment should not be granted when there are relevant facts remaining
to be discovered, but the party seeking a continuance bears the burden to show
what specific facts it hopes to discover that will raise an issue of material
fact." Continental Maritime v. Pacific Coast Metal Trades, 817 F.2d 1391, 1395
(9th Cir. 1987).
A Rule 56(f) motion should be granted where the party opposing summary judgment
makes a timely application that specifically identifies relevant information to
be discovered, and there is some basis for believing that such information
actually exists. Visa Int'l Serv. Ass'n v. Bankcard Holders, 784 F.2d 1472, 1475
(9th Cir. 1986). Granting of such a motion is particularly appropriate where the
identified information is the subject of outstanding discovery requests. Id.
D. Amendment
Rule15(a) of the Federal Rules of Civil Procedure provides for the amendment of
pleadings by leave of court and requires that such leave "shall be freely given
when justice so requires." Fed. R. Civ. P. 15(a). However, the grant or denial
of a motion to amend is committed to the discretion of the district court, and
denial is proper where there is "undue delay, bad faith or dilatory motive on
the part of the movant, repeated failure to cure deficiencies by amendments
previously allowed, undue prejudice to the opposing party by virtue of allowance
of the amendment, futility of the amendment, etc." Foman v. Davis, 371 U.S. 178,
182 (1962); see also Lockman Found. v. Evangelical Alliance Mission, 930 F.2d
764, 772 (9th Cir. 1991). An amendment is considered futile where the added
claim could be defeated by a motion to dismiss or for summary judgment. See
Wilson v. American Trans Air, Inc., 874 F.2d 386, 392 (7th Cir. 1989).
E. Intervention
Rule 24 of the Federal Rules of Civil Procedure is to be broadly interpreted in
favor of allowing intervention. See Forest Conservation Council v. United States
Forest Service, 66 F.3d 1489, 1493 (9th Cir. 1995). Rule 24 entitles a party to
intervene as of right when the applicant claims an interest relating to the
property or transaction which is the subject of the action and the applicant is
so situated that the disposition of the action may as a practical matter impair
or impede the applicant’s ability to protect that interest, unless the
applicant’s interest is adequately represented by existing parties. Fed. R. Civ.
P. 24(a). A motion to intervene under Rule 24(a) is subject to the following
four-part test:
(1) the motion must be timely; (2) the applicant must claim a significantly
protectable interest relating to the property or transaction which is the
subject of the action; (3) the applicant must be so situated that the
disposition of the action may as a practical matter impair or impede its ability
to protect that interest; and (4) the applicant’s interest must be inadequately
represented by the parties to the action.
Forest Conservation Council, 66 F.3d at 1493 (quoting Sierra Club v. U.S.
Environmental Protection Agency, 995 F.2d 1478, 1481 (9th Cir. 1993)).
Even if a party does not qualify for intervention of right, a court may permit
that party’s intervention under the following circumstances:
when an applicant’s claim or defense and the main action have a question of fact
or law in common. . . . [or] [w]hen a party to an action relies for ground of
claim or defense upon any statute or executive order administered by a federal
or state governmental officer or agency or upon any regulation, order,
requirement, or agreement issued or made pursuant to the statute or executive
order.
Fed. R. Civ. P. 24(b). In deciding whether a party should be permitted to
intervene, the court shall consider whether the intervention will unduly delay
or prejudice the adjudication of the rights of the original parties. Id.
Permissive intervention is committed to the broad discretion of the district
court. Orange County v. Air Cal., 799 F.2d 535, 539 (9th Cir. 1986).
DISCUSSION
I. Defendants’ motion for partial summary judgment
In adjudicating this dispute, this Court finds a number of recent cases dealing
with the DMCA instructive and persuasive. In the Second Circuit, many of these
issues were considered at both the trial court level in Universal City Studios,
Inc. v. Reimerdes, 111 F. Supp. 2d 346 (S.D.N.Y. 2000), and at the appellate
level in Universal City Studios, Inc. v. Corley, 273 F.3d 429 (2nd Cir. 2001).
In addition, Judge Ronald Whyte of this district wrote a lengthy and well
reasoned opinion in United States v. Elcom LTD., 203 F. Supp. 2d 1111 (N.D. Cal.
2002). This Court finds these cases dispositive on many of the same issues
raised by plaintiffs and defendants in the instant case.
Corley (and the district court case of Reimerdes) dealt, as this case does, with
the decryption of DVDs. Eric Corley and his company, 2600 Enterprises, Inc.,
appealed the district court’s judgment, following a full non-jury trial, which
enjoined them from posting the DeCSS decryption program on the 2600 website, or
linking to any website on which DeCSS was posted. Corley, 273 F.3d at 434-35.
Defendants argued that the DMCA overstepped limits in the Copyright Clause on
the duration of copyright protection, that the DMCA as applied to their
dissemination of DeCSS violated the First Amendment, and that the DMCA violated
the First Amendment and Copyright Clause by unduly obstructing fair use of
copyrighted materials. Id. at 436. The Second Circuit held: 1) that the
constitutional challenge based on the Copyright Clause was premature and
speculative; 2) that intermediate scrutiny was the appropriate standard of
review under which to analyze the injunction against posting or linking to
DeCSS, and that under intermediate scrutiny the injunction did not unduly burden
defendants’ First Amendment rights; and 3) that the DMCA, as applied by the
District Court, does not unconstitutionally limit fair use. Id. at 445, 450-458,
458-59.
In Elcom, the defendant was criminally prosecuted by the United States for
violations of the DMCA. A product sold by Adobe Systems, called Adobe Acrobat
eBook Reader, provides technology to read on personal computers books produced
in digital form. Elcom, 203 F. Supp. 2d at 1117. The Adobe Acrobat eBook Reader
contained restrictions that allowed the purchaser of an electronic book to read
the book only on the computer onto which the book had been downloaded, but
barred the purchaser from emailing or copying the book onto another computer.
Id. at 1118. Defendant Elcomsoft developed and sold a product called the
Advanced eBook Processor (AEBPR), which allowed a user to remove the use
restrictions from electronic books and allowed the book to be easily reproduced
and electronically distributed. Id. Defendant was indicted for violations of the
DMCA for trafficking in and marketing of the AEBPR. Defendant filed a motion to
dismiss the indictment, based on the unconstitutionality of the DMCA. Defendant
argued first that the DMCA was unconstitutionally vague as applied to it and
therefore violated the Due Process Clause. Defendant also argued that the DMCA
violated the First Amendment, contending that it was a content-based restriction
that was not narrowly tailored to serve a compelling government interest, that
it infringed the fair use rights of third parties, and that it was too vague,
and therefore impermissibly chilled free expression. Judge Whyte held: 1) that
the DMCA had no ambiguity in what tools are allowed or prohibited, and therefore
the law was not unconstitutionally vague; 2) that while computer code is speech,
and is therefore protected by the First Amendment, the DMCA is sufficiently
tailored to protect legitimate and substantial governmental interests, and so
did not burden defendant’s First Amendment rights; 3) that the DMCA does not
impermissibly violate fair use rights of users; 4) that the DMCA is not
unconstitutionally vague under the First Amendment; and 5) that Congress did not
exceed its authority in enacting the DMCA.1
This Court will discuss both the Corley and the Elcom decisions in more detail
throughout this opinion.
A. 321's liability under the anti-circumvention provisions of the DMCA
1. The Digital Millennium Copyright Act
Congress enacted the DMCA in 1998 following the adoption of the World
Intellectual Property Organization Copyright Treaty. Two sections of the DMCA
are at issue in this case. The first, 17 U.S.C.§ 1201(a)(2), provides:
No person shall manufacture, import, offer to the public, provide, or otherwise
traffic in any technology, product, service, device, component, or part thereof,
that
(A) is primarily designed or produced for the purpose of circumventing a
technological measure that effectively controls access to a work protected under
this title;
(B) has only limited commercially significant purpose or use other than to
circumvent a technological measure that effectively controls access to a work
protected under this title; or
(C) is marketed by that person or another acting in concert with that person
with that person’s knowledge for use in circumventing a technological measure
that effectively controls access to a work protected under this title.
The second, 17 U.S.C. §1201 (b)(1), provides:
No person shall manufacture, import, offer to the public, provide, or
otherwise traffic in any technology, product, service, device, component, or
part thereof, that
(A) is primarily designed or produced for the purpose of circumventing
protection afforded by a technological measure that effectively protects a right
of a copyright owner under this title in a work or a portion thereof;
(B) has only limited commercially significant purpose or use other than to
circumvent protection afforded by a technological measure that effectively
protects a right of a copyright owner under this title in a work or a portion
therefore; or
(C) is marketed by that person or another acting in concert with that person
with that person’s knowledge for use in circumventing protection afforded by a
technological measure that effectively protects a right of a copyright owner
under this title in a work or a portion thereof.
However, both sections are subject to 17 U.S.C. § 1201 (c)(3), which provides:
Nothing in this section shall affect rights, remedies, limitations, or defenses
to copyright infringement, including fair use, under this title.
In both §§ 1201 (a)(2) and (b)(1), only one of the three enumerated conditions
must be met in order to find a violation of the statute. Defendant Studios
contend that plaintiff 321 Studios is engaged in all three types of conduct
prohibited by both §§ 1201(a)(2) and (b)(1).
2. The challenged conduct of 321 Studios
The Studios state first that 321's DVD copying software is plainly technology
within the meaning of § 1201. Defendants then assert that CSS is a technological
measure that both effectively controls access to a work protected under the
DMCA, triggering § 1201(a)(2), and effectively protects a right of a copyright
owner under the DMCA, triggering § 1201(b)(1). As defined by the statute, a
technological measure effectively controls access to a work if the measure, in
the ordinary course of its operation, requires the application of information,
or a process or a treatment, with the authority of the copyright owner, to gain
access to the work, while a technological measure ‘effectively protects a right
of a copyright owner under this title’ if the measure, in the ordinary course of
operation, prevents, restricts, or otherwise limits the exercise of a right of a
copyright owner under this title. 17 U.S.C. § 1201 (a)(3)(B); (b)(2)(B).
Defendants assert that CSS prevents access to DVDs in the absence of the proper
CSS keys, and that only licensed DVD players can legally access the CSS keys in
order to play DVDs. See Universal Studios v. Reimerdes, 111 F. Supp. 2d at
317-318 (One cannot gain access to a CSS-protected work on a DVD without
application of the three keys that are required by the software. One cannot
lawfully gain access to the keys except by entering into a license with the DVD
CCA under authority granted by the copyright owners or by purchasing a DVD
player or drive containing the keys pursuant to such a license.) 321, in a
footnote, questions whether CSS is an effective control or protection of DVDs,
since the CSS access keys are widely available on the internet. However, this is
equivalent to a claim that, since it is easy to find skeleton keys on the black
market, a deadbolt is not an effective lock to a door. Moreover, the statute
itself defines effectively protects a right of a copyright owner under this
title to mean if the measure, in the ordinary course of its operation, prevents,
restricts, or otherwise limits the exercise of a right of a copyright owner
under this title. 17 U.S.C. § 1201(b)(2)(B). It is evident to this Court, as it
has been to previous courts, that CSS is a technological measure that both
effectively controls access to DVDs and effectively protects the right of a
copyright holder.2 See Reimerdes, 111 F. Supp. 2d at 317-18 (One cannot lawfully
gain access to the keys except by entering into a license with the DVD CCA under
authority granted by the copyright owners or by purchasing a DVD player or drive
containing the keys pursuant to such a license. In consequence, under the
express terms of the statute, CSS ‘effectively controls access’ to copyrighted
DVD movies. It does so, within the meaning of the statute, whether or not it is
a strong means of protection.)
Defendants next state that 321's DVD copying software is primarily designed or
produced for the purpose of circumventing CSS, has only limited commercially
significant purpose or use other than to circumvent CSS, and is marketed by 321
for use in circumventing CSS. The statute defines to circumvent a technological
measure as to descramble a scrambled work, to decrypt an encrypted work, or
otherwise to avoid, bypass, remove, deactivate, or impair a technological
measure, without the authority of the copyright owner and defines to circumvent
protection afforded by a technological measure as avoiding, bypassing, removing,
deactivating, or otherwise impairing a technological measure. 17 U.S.C. §§
1201(a)(3)(A) and (b)(2)(A). Defendants maintain that the only purpose of 321's
software is to bypass CSS protection and thereby to permit access to and copying
of CSS protected DVDs; and the 321 software would have no commercially
significant purpose without the circumvention components. Further, defendants
assert that none of the § 1201 exemptions apply and that legal uses of the
software by 321 customers are irrelevant to liability under § 1201.
Plaintiff 321 Studios disputes all of these claims. 321 accuses defendants of
ignoring the central fact that makes 321's DVD Copy Code legal . . . DVD Copy
Code works on original DVDs the user has already purchased, and thus
unquestionably has the right to access. Pltf’s Opposition 7:14-16 (emphasis in
original). Plaintiff argues that any circumvention of CSS raises issues under
only § 1201 (a), not § 1201(b), because CSS controls only access to DVDs, not
copying. Plaintiff further states that even if §1201(b) does apply, DVD Copy
Code would not violate it because its primary and intended use does not violate
any right of a copyright holder. Plaintiff maintains that, if providing the
means to decrypt CSS to the owner of the disk constituted circumvention under
§1201(a)(2), then all DVD player manufacturers must violate that section,
because every DVD player provides the means to decrypt CSS. Plaintiff notes that
making personal backup copies of DVDs is expressly authorized under the
copyright laws as fair use, and that, since the primary and intended use of
321's software is legal fair use, 321 does not violate § 1201 (b).
a. The provisions specific to § 1201 (a)(2)
Defendants assert that 321's DVD copying software is clearly violative of §1201
(a)(2), because it is designed for the purpose of circumventing CSS, which is a
technological measure that effectively controls access to the DVDs; it has only
limited commercially significant purpose or use other than to circumvent CSS;
and it is marketed for use in circumventing CSS. 321 responds that it cannot be
in violation of § 1201 (a)(2) because circumvent by definition is done without
the authority of the copyright holder. The DMCA provides at § 1201 (a)(3)(a)
that to ‘circumvent a technological measure’ means to descramble a scrambled
work, to decrypt an encrypted work, or otherwise to avoid, bypass, remove,
deactivate, or impair a technological measure, without the authority of the
copyright holder. 321 states that it does have the authority of the copyright
holder because its product only works on original DVDs, and the purchaser of the
DVD has authority of the copyright holder to bypass CSS. This argument was
offered and rejected in Corley, the Second Circuit case which also addressed
issues of DVD copying and the DMCA. In Corley, the defendants argued that an
individual who buys a DVD has the ‘authority of the copyright owner’ to view the
DVD, and therefore is exempted from the DMCA pursuant to subsection
1201(a)(3)(A) when the buyer circumvents an encryption technology in order to
view the DVD on a competing platform. Corley, 272 F.3d at 444. The court
responded: the basic flaw in this argument is that it misreads subsection
§1201(a)(3)(A). That provision exempts from liability those who would ‘decrypt’
an encrypted DVD with the authority of a copyright owner, not those who would
‘view’ a DVD with the authority of a copyright owner. Id. This Court agrees with
the Corley court that the purchase of a DVD does not give to the purchaser the
authority of the copyright holder to decrypt CSS.
Plaintiff also claims that if its software is in violation of §1201(a)(2), then
all DVD players must also be in violation, since they also decrypt CSS. This
argument lacks merit. Licensed DVD players have been issued a key to decrypt
CSS, and in exchange must adhere to strict prohibitions on copying of the
decrypted DVD; 321's software does not have such a license, and therefore does
not have the authority of the copyright owner. Accordingly, this Court rejects
plaintiff’s argument that the without the authority of the copyright holder
language exempts its product from liability under § 1201 (a)(2).
b. The provisions specific to §1201(b)(1)
Plaintiff first asserts that CSS is not a copy control measure, since it
controls only access to DVDs, but does not control or prevent copying DVDs.
Plaintiff goes on that § 1201 (b)(1), which prohibits devices that circumvent
technological measures which protect a right of a copyright owner, is concerned
only with illegal copying. Thus, since 321's product circumvents only CSS, and
CSS is not a copy control measure, § 1201 (b)(1) does not apply at all to 321.
However, 321 both misreads the statute and misstates the purposes of CSS. The
statute prohibits manufacturing, importing, offering to the public, providing,
or otherwise trafficking in any technology that circumvents protection afforded
by a technological measure that effectively protects a right of a copyright
owner. While 321 is technically correct that CSS controls access to encrypted
DVDs, the purpose of this access control is to control copying of those DVDs,
since encrypted DVDs cannot be copied unless they are accessed. 321 claims that
CSS does not prevent copying, since it does not prevent copying the encrypted
data on the DVD. However, as 321 admits that copying is not particularly useful,
as any copy made without circumventing CSS could not be accessed or viewed. Opp.
at 3:9-10. It is clear to this Court CSS is a copy control system, and therefore
§ 1201 (b)(1) does apply.
321 then states that, if § 1201 (b)(1) applies, 321's software does not violate
the section because the primary and intended use of the software does not
violate any right of a copyright holder. It asserts that many uses of the
software do not implicate the DMCA at all, as they do not involve accessing CSS;
do not implicate copyright infringement, as they involve making copies of DVDs
that are in the public domain; are fair use of copyrighted materials; or involve
making a single, archival backup copy of a movie that the user has already
purchased, which is authorized under copyright law. However, the downstream uses
of the software by the customers of 321, whether legal or illegal, are not
relevant to determining whether 321 itself is violating the statute. As Judge
Whyte of this District stated in Elcom: Congress did not ban the act of
circumventing the use restrictions. Instead, Congress banned only the
trafficking in and marketing of devices primarily designed to circumvent the use
restriction protective technologies. Congress did not prohibit the act of
circumvention because it sought to preserve the fair use rights of persons who
had lawfully acquired a work. Elcom, 203 F. Supp. 2d at 1120.
Corley also addressed and rejected a similar argument:
[Defendants] contend that subsection 1201(c)(1), which provides that nothing in
this section shall affect rights, remedies, limitations or defenses to copyright
infringement, including fair use, under this title can be read to allow the
circumvention of encryption technology protecting copyrighted material when the
material will be put to fair uses exempt from copyright liability. We disagree
that subsection 1201(c)(1) permits such a reading. Instead, it simply clarifies
that the DMCA targets the circumvention of digital walls guarding copyrighted
material (and trafficking in circumvention tools), but does not concern itself
with the use of those materials after circumvention has occurred. Subsection
1201 (c)(1) ensures that the DMCA is not read to prohibit the fair use of
information just because that information was obtained in a manner made illegal
by the DMCA.
Corley, 273 F.3d at 443. Indeed, a simple reading of the statute makes it clear
that its prohibition applies to the manufacturing, trafficking in and making of
devices that would circumvent encryption technology, not to the users of such
technology. It is the technology itself at issue, not the uses to which the
copyrighted material may be put. This Court finds, as did both the Corley and
Elcom courts, that legal downstream use of the copyrighted material by customers
is not a defense to the software manufacturer’s violation of the provisions of §
1201 (b)(1).
321 also asserts that its software does not violate §1201(b)(2) because the
software does not circumvent encryption. Section1201(b)(1) defines such
circumvention, as avoiding, bypassing, removing, deactivating, or otherwise
impairing a technological measure, and 321 states that its software does not
avoid, bypass, remove, deactivate, or otherwise impair a technological measure,
but that it simply uses the authorized key to unlock the encryption. However,
while 321's software does use the authorized key to access the DVD, it does not
have authority to use this key, as licensed DVD players do, and it therefore
avoids and bypasses CSS.
For these reasons, §1201(b)(1) does apply to 321's DVD copying software.
c. The common provisions of § 1201 (a)(2) and § 1201 (b)(1)
While defendants claim that plaintiffs’ product violates all three statutory
prongs of §§ 1201(a)(2) and (b)(1), plaintiff asserts that 321 violates none of
them. 321 asserts that its product was not primarily designed and produced to
circumvent a technological measure, that it does not have only limited
commercially significant purpose other than to circumvent CSS, and that the
prohibition against marketing a product for use in circumventing such protection
is violative of the First Amendment. This Court will take each prong in turn.
Plaintiff states that its DVD copying software was not primarily designed and
produced to circumvent a technological measure, but that it was designed and
produced to allow users to make copies of all or part of a DVD. Plaintiff
maintains that the ability to unlock CSS is just one of the features of its
software. However, as defendants point out, only that specific feature is
challenged here; and all that it does and was designed to do is to circumvent
CSS. Defendants contend in their reply brief that 321's admission that a part of
its software circumvents CSS is enough to render 321 liable, since the statute
bars any technology, product, service, device, component, or part thereof that
is primarily designed or produced for the purpose of circumventing. §§ 1201
(a)(2) and (b)(1) (emphasis added). Defendants’ reading of the statute is
correct. It is undisputed that a part of 321's software is solely for the
purpose of circumventing CSS; this portion of the software, therefore, violates
17 U.S.C. §1201(a)(2)(A).
With regard to the second prong of both § 1201(a)(2) and § 1201 (b)(1), it is
impossible for this Court to determine on summary judgment whether 321's product
has only limited commercially significant purposes other than circumvention, as
this is a question of fact for a jury to decide, and neither party has produced
significant evidence on this issue.
With regard to the third prong of both §1201(a)(2) and §1201(b)(1), 321does not
dispute that it markets its DVD copying software for use in circumventing CSS,
but states that the marketing prong of the statute violates the First Amendment.
321 claims that this prohibition against marketing forbids dissemination of
information about the product’s legal attributes, and that such a prohibition
cannot be reconciled with the First Amendment. See Rubin v. Coors Brewing Co.,
514 U.S. 476 (1995); see also 44 Liquormart v. Rhode Island, 517 U.S. 484
(1996). However, these cases are inapposite, as the First Amendment does not
protect commercial speech that involves illegal activity, and this Court has
found that the CSS circumvention portion of the 321 software is illegal. See
Florida Bar v. Went for It, Inc., 515 U.S. 618, 623-24 (1995) (The government
may freely regulate commercial speech that concerns unlawful activity.); see
also Corley, 272 F.3d at 447. Therefore, as 321 markets its software for use in
circumventing CSS, this Court finds that 321's DVD copying software is in
violation of the marketing provisions of §§ 1201(a)(2) and (b)(1).
Accordingly, this Court finds that 321's software is in violation of both § 1201
(a)(2) and § 1201 (b)(1), because it is both primarily designed and produced to
circumvent CSS, and marketed to the public for use in circumventing CSS.
B. Constitutionality of the DMCA
Plaintiff 321 asserts that the DMCA, as construed by the defendants, violates
the First Amendment and is therefore unconstitutional. 321 argues that a ban on
its DVD copying software impermissibly burdens the First Amendment rights of its
users; that the DMCA unconstitutionally restricts 321's speech; that the DMCA is
substantially overbroad, so as to give 321 standing to pursue a constitutional
challenge on behalf of its customers; and that the DMCA exceeds the scope of
congressional powers.
The Studios respond that the intermediate level of scrutiny used by both the
Elcom and Corley courts is the appropriate standard, and that under this
standard the statutes pass muster: the government had legitimate and substantial
interests in imposing the restriction; the interests are unrelated to the
suppression of free expression; and the restrictions on the First Amendment
freedoms of plaintiffs are no greater than is essential to the furtherance of
the governmental interests. See Turner Broadcasting System, Inc. v. FCC, 512
U.S. 622, 662 (1994).
1. Standing
As a threshold issue, defendants first assert that plaintiff does not have
standing to raise a First Amendment challenge on behalf of its customers.
However, because this Court will grant Larry Davis’ motion to intervene as
plaintiff (infra), this standing issue is moot.
2. The DMCA does not unconstitutionally restrict 321's speech
Plaintiff contends that the DMCA unconstitutionally restricts 321's First
Amendment right to tell others how to make fair use of copyrighted works. Courts
have held that computer code is speech, and therefore merits First Amendment
protection. See Corley, 273 F.3d at 445-449 (Communication does not lose
constitutional protection as ‘speech’ simply because it is expressed in the
language of computer code.); see also Bernstein v. United States Dep’t of State,
922 F. Supp. 1426, 1434-36 (N.D. Cal, 1996); Junger v. Daley, 209 F.3d 481, 484
(6th Cir. 2000)). Courts have found that both the executable object code and the
more readable source code merit First Amendment protection.3 See Elcom, 203 F.
Supp. 2d at 1126. As with other kinds of speech, the scope of the protection for
computer code depends upon whether the restriction on the code is because of its
content. See Corley, 273 F.3d at 450.
Plaintiffs argue that the DMCA, as interpreted by the Studios, regulates the
computer code on the basis of its content, since it bans only the kind of speech
(code) that indicates how to circumvent a technological measure that protects a
copyright. As such, plaintiff argues, the strict scrutiny analysis applies.
However, like both the Corley and Elcom courts, this Court finds that
intermediate scrutiny is the appropriate level of scrutiny with which to analyze
this case.
While the DMCA does refer to the function of the technological measures that it
bars, it is only that functional element of the computer code that is barred;
the DMCA does not suppress the speech contained within the computer code because
of its content, but only because of the way in which that code, when executed,
operates. In Corley, defendants challenged the district court’s injunction
against posting DeCSS or any other technology for circumventing CSS on any
Internet web site. The Corley court stated:
[Defendants’] argument fails to recognize that the target of the posting
provisions of the injunction DeCSS has both a nonspeech and a speech component,
and that the DMCA, as applied to the [defendants], and the posting prohibition
of the injunction target only the nonspeech component. Neither the DMCA nor the
posting prohibition is concerned with whatever capacity DeCSS might have for
conveying information to a human being, and that capacity, as previously
explained, is what arguably creates a speech component of the decryption code.
The DMCA and the posting prohibition are applied to DeCSS solely because of its
capacity to instruct a computer to decrypt CSS. That functional capability is
not speech within the meaning of the First Amendment. The Government seeks to
justify both the application of the DMCA and the posting prohibition to the
[defendants] solely on the basis of the functional capability of DeCSS to
instruct a computer to decrypt CSS, i.e., without reference to the content of
the regulated speech. This type of regulation is therefore content-neutral, just
as would be a restriction on trafficking in skeleton keys identified because of
their capacity to unlock jail cells, even though some of the keys happened to
bear a slogan or other legend that qualified as a speech component.
Corley, 273 F.3d at 454 (citing Hill v. Colorado, 530 U.S. 703, 720 (2000)).
The defendants in Elcom made a similar argument, claiming that it is impossible
to regulate the ‘functional’ aspects of computer code without necessarily
regulating the content of the expressive aspects of the code. Elcom, 203 F.
Supp. 2d at 1128. Judge Whyte rejected this argument: Divorcing the function
from the message, however, is precisely what the courts have done in other
contexts, for example, in determining what portions of code are protectable by
copyright and what uses of that same code are permitted as fair uses. Id. at
1128-29. He concluded that intermediate scrutiny, rather than strict scrutiny,
is the appropriate standard to apply. Under this test, the regulation will be
upheld if it furthers an important or substantial government interest unrelated
to the suppression of free expression, and if the incidental restrictions on
First Amendment freedoms are no greater than essential to the furtherance of
that interest. Id. at 1129.
In this case, plaintiffs only offer legal arguments that the previous courts
considered and rejected. This Court comes to the same conclusion as the courts
who previously considered this question, and determines that intermediate
scrutiny is the appropriate standard under which the DMCA should be analyzed.
Under intermediate scrutiny, the Government must demonstrate that the recited
harms are real, not merely conjectural, and that the regulation will in fact
alleviate these harms in a direct and material way. Turner Broadcasting System,
Inc. v. FCC, 512 U.S. 622, 624 (1994). This Court must accord substantial
deference to the predictive judgments of Congress, since [a]s an institution . .
. Congress is far better equipped than the judiciary to ‘amass and evaluate the
vast amounts of data’ bearing upon an issue as complex and dynamic as that
presented here. Id. Congress enacted the DMCA after evaluating a great deal of
information, including testimony from a number of the law professors who filed
an amicus brief before this Court. Congress determined that the DMCA was needed
to protect copyrights and intellectual property rights; this Court finds that
the challenged provisions further important and substantial government interests
unrelated to the suppression of free expression, and that the incidental
restrictions on First Amendment freedoms are no greater than essential to the
furtherance of those interests.
3. The statute does not impermissibly burden the fair use rights of users
This Court concludes that the challenged portions of the DCMA do not
unconstitutionally burden the fair use rights of users of the copyrighted
material. In reaching this result, the Court rejects as too sweeping plaintiff’s
claim that such users have a First Amendment right to make fair use of
copyrighted works based on Eldred v. Ashcroft, 123 S. Ct. 769 (2003). The Eldred
case stated that in addition to spurring the creation and publication of new
expression, copyright law contains built-in First Amendment accommodations . . .
the ‘fair use’ defense allows the public to use not only facts and ideas
contained in a copyrighted work, but also the expression itself in certain
circumstances. Eldred, 123 S. Ct. at 788-89. However, the Court went on to
state: [t]he First Amendment securely protects the freedom to make or decline to
make one’s own speech; it bears less heavily when speakers assert the right to
make other people’s speeches. To the extent such assertions raise First
Amendment concerns, copyright’s built-in free speech safeguards are generally
adequate to address them. Id. at 789. While the Court further declared that
copyrights are not immune from challenges under the First Amendment, it is a
stretch to claim that Eldred mandated absolute First Amendment protection for
fair use of copyrighted works.
As the First Amendment bears less heavily in situations such as this, this Court
determines that the burdens concededly imposed by the DMCA do not
unconstitutionally impinge fair use rights. Although not all content on DVDs may
be available in other forms, plaintiffs have conceded that it is possible to
copy the content in other ways than in an exact DVD copy. This Court agrees with
this analysis in Corley:
We know of no authority for the proposition that fair use, as protected by the
Copyright Act, much less the Constitution, guarantees copying by the optimum
method or in the identical format of the original. . . The fact that the
resulting copy will not be as perfect or as manipulable as a digital copy
obtained by having direct access to the DVD movie in its digital form, provides
no basis for a claim of unconstitutional limitation of fair use.
Corley, 272 F.3d at 459. Fair use is still possible under the DMCA, although
such copying will not be as easy, as exact, or as digitally manipulable as
plaintiff desires. Furthermore, as both Corley and 321 itself stated, users can
copy DVDs, including any of the material on them that is unavailable elsewhere,
by non-digital means. 321's assertion that this would impermissibly place a
financial burden on users’ First Amendment rights is both an overstatement of
the extent of the fair use doctrine and a misstatement of First Amendment law. A
financial burden would only render a statute unconstitutional if it was placed
on the speaker because of the content of the speech, not because of the
speaker’s desire to make such speech. See Simon & Schuster, Inc. v. Members of
N.Y. State Crime Victims Board, 502 U.S. 105, 115 (1991); Arkansas Writers’
Project, Inc. v. Ragland, 481 U.S. 221, 232-233 (1987); Minneapolis Star &
Tribute v. Minnesota Commissioner of Revenue, 460 U.S. 575, 588 (1983). As Elcom
stated, Congress has not banned or eliminated fair use and nothing in the DMCA
prevents anyone from quoting from a work or comparing texts for the purpose of
study or criticism. The fair user may find it more difficult to engage in
certain fair uses with regard to electronic books, but nevertheless, fair use is
still available. Elcom, 203 F. Supp. 2d at 1134-35.
Plaintiff also claims that the DMCA impairs the First Amendment right to access
non-copyrighted works: [U]nder the Studios’ reading of the DMCA, because the
technological measure can be used to protect a copyrighted work, it is illegal
to market a product that could circumvent it even if the product is applied to
non-copyrighted works. Pltfs. Opposition at 22:21-23 (emphasis in original).
Again, however, while purchasers of DVDs with material in the public domain
unquestionably have the right to make use of this public domain material, they
can simply access it from a non-CSS encrypted DVD or can choose to access and
copy this public domain material in a non-digital form. The DMCA does not
prohibit copying of non-CSS encrypted material, so if 321 removed the part of
its software that bypasses CSS and marketed only the DVD copying portion, it
could freely market its product to customers who use the software to copy
non-CSS encrypted DVDs and other public domain material. As Elcom stated:
A public domain work remains in the public domain. Any person may use the public
domain work for any purpose quoting, republishing, critiquing, comparing, or
even making and selling copies. Publishing the public domain work in an
electronic format with technologically imposed restrictions on how that
particular copy of the work may be used does not give the publisher any legally
enforceable right to the expressive work, even if it allows the publisher to
control that particular copy.
Elcom, 203 F. Supp. 2d at 1134.
Plaintiffs then contend that a prohibition on its DVD copying software is not
necessary to advance any significant government interest. Necessity, however, is
not the test. As the Elcom case stated:
Under intermediate scrutiny, it is not necessary that the government select the
least restrictive means of achieving its legitimate governmental interest. By
its very nature, the intermediate scrutiny test allows some impingement on
protected speech in order to achieve the legitimate governmental objective. A
sufficiently important governmental interest in regulating the targeted conduct
can justify incidental limitations on First Amendment freedoms. Having
considered the arguments asserted by the parties, the court finds that the DMCA
does not burden substantially more speech than is necessary to achieve the
government’s asserted goals of promoting electronic commerce, protecting
copyrights, and preventing electronic piracy.
Elcom, 203 F. Supp. 2d at 1132.
There are significant governmental interests involved in this prohibition on DVD
copying software, and it is not required that proof of its use for copyright
infringement be presented at this stage. This Court finds that a ban on
manufacturing, importing, offering to the public, providing, or otherwise
trafficking in technology that circumvents CSS does not impermissibly burden the
First Amendment rights of it DVD users.
4. The DMCA does not exceed the scope of Congressional powers
321 claims that the DMCA cannot be sustained under the Commerce Clause, the
Intellectual Property Clause, or the Necessary and Proper Clause. In Elcom,
Judge Whyte considered and rejected the first two of these claims. With regard
to the Commerce Clause claim, he stated: Congress plainly has the power to enact
the DMCA under the Commerce Clause. The commerce power ‘is the power to
regulate; that is, to prescribe the rule by which commerce is to be governed.
This power, like all others vested in Congress, is complete in itself, may be
exercised to its utmost extent, and acknowledges no limitations, other than are
prescribed by the Constitution.’ The DMCA prohibits conduct that has a
substantial effect on commerce between the states and commerce with foreign
nations. Trafficking in or the marketing of circumvention devices for gain, as
proscribed by Sections 1201(b) and 1204, has a direct effect on interstate
commerce. To the extent that circumvention devices enable wrongdoers to engage
in on-line piracy by unlawfully copying and distributing copyrighted works of
authorship, the sale of such devices has a direct effect on suppressing the
market for legitimate copies of the works. Accordingly, there is a rational
basis for concluding that the regulated activity sufficiently affects interstate
commerce to establish that Congress had authority under the Commerce Clause to
enact the legislation. Elcom, 203 F. Supp. 2d at 1138 (internal citations
omitted). Judge Whyte then acknowledged that the analysis of whether Congress
was precluded by the Intellectual Property Clause from enacting the DMCA was a
more difficult question, but stated:
Protecting the exclusive rights granted to copyright owners against unlawful
piracy by preventing trafficking in tools that would enable widespread piracy
and unlawful infringement is consistent with the purpose of the Intellectual
Property Clause’s grant to Congress of the power to promote the useful arts and
sciences by granting exclusive rights to authors in their writings. In addition,
Congress did not ban the use of circumvention tools out of a concern that
enacting such a ban would unduly restrict the fair use doctrine and expressly
sought to preserve fair use. See 17 U.S.C. §1201(c). Therefore, on the whole,
the DMCA’s anti-device provisions are not fundamentally inconsistent with the
Intellectual Property Clause.
Id. at 1140-41. He then went on to analyze whether the DMCA was irreconcilably
inconsistent with a limitation contained within the Intellectual Property
Clause:
While the DMCA may make certain fair uses more difficult for digital works of
authorship published with use restrictions, fair use has not been eliminated.
Similarly, the argument that Congress’ ban on the sale of circumvention tools
has the effect of allowing publishers to claim copyright-like protection in
public domain works is tenuous and unpersuasive. Nothing within the DMCA grants
any rights to anyone in any public domain work. A public domain work remains in
the public domain and any person may make use of the public domain work for any
purpose.
Id. at 1141. The plaintiff here makes a similar claim, that since the DMCA
outlaws the trafficking in and marketing of such de-encryption technology, that
it has also eliminated the possibility of fair use. But as was stated in Corley
[Defendants] have provided no support for their premise that fair use of DVD
movies is constitutionally required to be made by copying the original work in
its original format . . . A film critic making fair use of a movie by quoting
selected lines of dialogue has no constitutionally valid claim that the review
(in print or on television) would be technologically superior if the reviewer
had not been prevented from using a movie camera in the theater, nor has an art
student a valid constitutional claim to fair use of a painting by photographing
it in a museum. Fair use has never been held to be a guarantee of access to the
copyrighted material in order to copy it by the fair user’s preferred technique
or in the format of the original.
Corley, 272 F.3d at 459. Ultimately, the Elcom court concluded:
Accordingly, the DMCA does not run afoul of any restraint on Congress’ power
imposed by the Intellectual Property Clause. Section 1201(b) of the DMCA was
within Congress’ Commerce Power to enact, and because it is not irreconcilably
inconsistent with any provision of the Intellectual Property Clause, Congress
did not exceed its constitutional authority in enacting the law.
Id. at 1141-42.
However, 321 contends that while both Corley and Elcom state that fair use is
not constitutionally based, the Supreme Court has, since those decisions,
rejected that view in Eldred v. Ashcroft, 123 S.Ct. 769 (2003). In Eldred, the
Court stated: [C]opyright law contains built-in First Amendment accommodations.
First, it distinguishes between ideas and expression and makes only the latter
eligible for copyright protection . . . Second, the ‘fair use’ defense allows
the public to use not only facts and ideas contained in a copyrighted work, but
also expression itself in certain circumstances. Id. at 788-89. However, § 1201
does not eliminate fair use, and the doctrine of fair use does not guarantee
copying by the optimum method or in the identical format of the original. This
Court determines that the DMCA does not exceed the scope of either the Commerce
or the Intellectual Property Clauses.4
Accordingly, defendants are entitled to summary judgment that 321 has violated
17 U.S.C. §§ 1201(a)(2) and (b)(1), and that 321 is not entitled to a
declaratory judgment that its DVD Copy Plus and DVD-X Copy are permissible under
17 U.S.C. § 1201. Furthermore, this Court dismisses 321's Second Claim for
Relief as moot, since by granting summary judgment to defendants, there is no
current and justiciable controversy as to whether 321 is also liable for
copyright infringement, the claim raised in the Second Claim for Relief.
B. Request for injunction
This Court also determines that an injunction, as provided for in 17 U.S.C. §
1203(b), is appropriate. That statute provides: In an action brought under
[sections 1201 or 1202], the court may grant temporary and permanent injunctions
on such terms as it deems reasonable to prevent or restrain a violation. The
Court in Reimerdes stated injunctive relief is appropriate if there is a
reasonable likelihood of future violations absent such relief and, in cases
brought by private plaintiffs, if the plaintiff lacks an adequate remedy at law.
Reimerdes, 111 F. Supp. 2d at 343. These two elements are present in the instant
case. While the Reimerdes court did not issue the injunction until after a full
trial, that court stated in the Court’s view, the trial fully vindicated its
pretrial assessment that there were, in actuality, very few genuinely disputed
questions of material fact. Examination of the trial record will reveal that
virtually the entire case could have been stipulated. Reimerdes, 111 F. Supp. 2d
at 345. Furthermore, there is a distinct likelihood of appeal in this case and
judicial economy leads this Court to attempt to ensure that the appellate record
is complete. Accordingly, this Court enjoins 321, as of seven days from the
issuance of this order, from manufacturing, distributing, or otherwise
trafficking in any type of DVD circumvention software.
II. Plaintiff Victor Mattison’s motion to dismiss defendants’ counterclaims
Counterclaimant Victor Mattison moves this Court to dismiss defendants’
counterclaims against him. Mr. Mattison is a part owner of a company which owns
stock in 321 Studios, and therefore he passively owns twenty five percent of 321
Studios’ stock. Mr. Mattison asserts that § 1201(a)(2)(C) does not create
personal liability for passive investors, and that liability is limited to those
who sell the prohibited devices, and those who act in concert with the sellers.
He argues that the defendants/ counterclaimants have not alleged any facts which
would give rise to the inference that he acted in concert with 321 Studios, and
therefore the claims against him must be dismissed.
The Studios contend that they have included numerous detailed factual averments
concerning Mattison’s active participation in and involvement with the
technology at issue in this action. Mr. Mattison’s response, with which this
Court concurs, is that the Studios have not alleged facts that would support the
inference that he acted in concert with 321; rather, all of their allegations
regarding him consist of purely legal conclusions. He brings to this Court’s
attention both Counterclaims 66 and 68, which state respectively:
66. Counterclaimants are informed and believe, and on that basis aver, that
Counterclaim Defendant Victor Mattison (Mattison) is and at all times relevant
hereto was a 25% owner of 321 Studios.
68. Each of the Counterclaim Defendants is, and at all times mentioned herein
was, a party to the unlawful activities complained of herein, and has conspired
with and/or acted in concert or combination with each of the other Counterclaim
Defendants and/or has aided and abetted such other Counterclaim Defendant and/or
has acted as an agent for each of the other Counterclaim defendants with respect
to the actions and matters described in this Counterclaim, and/or has controlled
each of the other Counterclaim Defendants and the infringing conduct herein
alleged.
The Studios cite two other paragraphs of the counterclaim. Paragraph 67 states:
67. Counterclaimants are informed and believe, and on that basis aver, that
Moore, Semaan, and Mattison (hereinafter sometimes referred to collectively as
the Individual Counterclaim Defendants) direct, control, ratify, participate in,
and/or are the moving forces behind the violation of Counterclaimants’ rights
complained of herein.
Paragraph 79 alleges that the counterclaim defendants
developed and now operate a business that is designed for and built upon the
unlawful marketing, distribution and sale to the public of software...that is
specifically designed for the purpose of decrypting CSS-protected DVDs,
including those containing copyrighted motion pictures owned by
Counterclaimants. The decrypted DVDs then are used to make unauthorized copies
of Counterclaimants copyrighted motion pictures. Counterclaimants exhort
purchasers, including through their advertising and promotional efforts to do
precisely that.
This Court agrees that these are legal conclusions pled as if they were facts.
Defendants do not allege any facts that would support the inference that Mr.
Mattison is any more than a passive investor in 321 Studios. Therefore, as the
Court determines that as defendants’ counterclaims against Mr. Mattison fail to
state a claim upon which relief can be granted, this Court GRANTS plaintiff
Victor Mattison’s motion to dismiss.
III. Plaintiff’s motion for denial or continuance of motion for summary
judgment pursuant to Rule
56(f)
Plaintiff 321 moves under Rule 56(f) to delay summary judgment until it has had
the opportunity to do discovery on a number of subjects that it claims are
relevant to the summary judgment motion: 1) whether CSS is effective under §
1201; 2) whether DVD Copy Code is primarily used for fair use purposes; 3)
whether DVD Copy Code is primarily designed or produced to circumvent, and has
commercially significant purposes other than to circumvent; 4) whether a ban on
DVD Copy Code impermissibly burdens the First Amendment; 5) whether a ban on DVD
Copy Code is the least restrictive means; 6) whether the DMCA is facially
overbroad; 7) whether the Studios’ claims under the DMCA are barred by misuse;
and 8) whether the Studios can demonstrate any injury. In opposition to this
motion, the Studios assert both that 321 has not been diligent in pursuing the
discovery it seeks, as required under 56(f), and that 321 has not met its burden
of showing that the evidence that it seeks would defeat summary judgment.
This Court agrees with defendants that none of the discovery sought by
plaintiffs is necessary for determination of the summary judgment motion. It
deals either with concepts defined in the statute itself, or with issues not
relevant the summary judgment decision. Accordingly, the Court DENIES
plaintiff’s motion for denial or continuance of this motion for summary judgment
pursuant to Rule 56(f).
IV. Motions for leave to file amicus briefs in opposition to defendants’ motion
for partial summary judgment
The Court GRANTS the motions by Electronic Frontier Foundation and Copyright Law
Professors to file amicus briefs in opposition to defendants’ motion for partial
summary judgment.
V. Plaintiff’s motion for leave to amend answer to counterclaim
Plaintiff 321 Studios, and counterclaim defendants Robert Moore and Robert
Semaan, seek leave to file an amended answer to the counterclaim, to plead the
defenses of fair use, protected speech under the First Amendment, and misuse.
Defendants contend that the amended defenses are not legally viable, and
therefore this Court should deny the plaintiff’s motion.
The Court agrees. Fair use and misuse are defenses only to copyright
infringement claims, which are not at issue in this motion. Additionally, as
this Court has already related in some detail in the summary judgment portion of
this opinion, the First Amendment is not an affirmative defense to a claim under
the DMCA. Therefore, as 321's proposed amended defenses are futile, this Court
DENIES the motion to amend counterclaims.
VI. Larry Davis’ motion to intervene as plaintiff
Larry Davis is an individual who uses 321's DVD copying software to make backup
copies of his DVDs for his personal use, and moves this Court to intervene as a
plaintiff in this action, in accordance with Rule 24(a). The motion is GRANTED.
VII. Defendants’ request for judicial notice
Pursuant to Fed. R. Evid. 201, defendants request that this Court take Judicial
Notice of: 1) Order Granting Preliminary Injunction, Lexmark Int’l v. Static
Control Components, Inc., Civ. No. 02-571 (KSF) (E.D. Ky. February 27, 2003); 2)
NII [National Information Infrastructure] Copyright Protection Act of 1995,
Joint Hearing Before the Subcommittee on Courts and Intellectual Property of the
House Committee on the Judiciary and the Senate Committee on the Judiciary,
104th Cong. 1st Sess. on H.R. 2441 and S.1284, NII Copyright Protection Act of
1995, November 15, 1995, Serial No. 38 (Part 1) and Serial No. J-104-57 (U.S.
Govt. Printing Office, 1996); 3) National Information Infrastructure Copyright
Protection Act of 1995, Hearing Before the Committee on the Judiciary, United
States Senate, 104th Cong., 2d Sess. on S. 1284, May 7 1996, Serial No. J-104-78
(U.S. Govt. Printing Office, 1997); 4) WIPO Copyright Treaties Implementation
Act; And Online Copyright Liability Limitation Act, Hearing Before the
Subcommittee on Courts and Intellectual Property of the Committee on the
Judiciary, House of Representatives, 105th Cong., 1st Sess. on H.R. 2281 and
H.R. 2280, September 16 and 17, 1997, Serial No. 33 (U.S. Govt. Printing Office,
1997); and 5) Intellectual Property Rights: The Music and Film Industry, Hearing
Before the Subcommittee on International Economic Policy and Trade of the
Committee on International Relations, House of Representatives, 105th Cong., 2d
Sess., May 21, 1998 (U.S. Govt. Printing Office 1998). This Court takes judicial
notice of these documents, because they are the types of documents for which the
accuracy cannot reasonably be questioned.
CONCLUSION
For the foregoing reasons, the Court GRANTS defendant/counterclaimants’ motion
for partial summary judgment (Docket #70), GRANTS plaintiff Victor Mattison’s
motion to dismiss defendants’ counterclaims (Docket #68), DENIES plaintiff’s
motion for denial or continuance of motion for summary judgment pursuant to Rule
56(f) (Docket #87), GRANTS Electronic Frontier Foundation’s and Copyright Law
Professors’ motion for leave to file amici briefs in opposition to defendants’
motion for summary judgment (Docket ## 91, 92), DENIES plaintiff’s motion for
leave to amend answer to counterclaim (Docket #93), GRANTS Larry Davis’ motion
to intervene as plaintiff (Docket #95), and GRANTS defendants’ requests for
judicial notice (Docket ## 100, 104). Further, this Court enjoins plaintiff 321
Studios from manufacturing, distributing, or otherwise trafficking in any type
of DVD circumvention software. This injunction shall take effect seven days from
the issuance of this order.
IT IS SO ORDERED.
Dated: February 19, 2004 __s/Susan Illston_____________________
SUSAN ILLSTON
United States District Judge
1 After the Elcom motion to dismiss was denied, defendant was tried and
acquitted by a jury.
2Plaintiff 321 Studios also disputes that CSS protects the right of a copyright
holder (as is necessary for a violation of §1201(b)(1)), stating that it only
controls access to DVDs, but is not a copy control device. That argument is
discussed infra.
3 Corley provides a helpful explanation of the difference between object code
and source code: A computer responds to electrical charges, the presence or
absence of which is represented by strings of 1's and 0's. Strictly speaking,
‘object code’ consists of those 1's and 0's. While some people can read and
program in object code, ‘it would be inconvenient, inefficient and, for most
people, probably impossible to do so.’ Computer languages have been written to
facilitate program writing and reading. A program in such a computer language
BASIC, C, and Java are examples is said to be written in ‘source code.’ Source
code has the benefit of being much easier to read (by people) than object code,
but as a general matter, it must be translated back to object code before it can
be read by a computer. Corley, 273 F.3d at 438-39 (internal citations omitted).
4The Necessary and Proper Clause analysis is irrelevant, as Congress clearly
stated that the DMCA was enacted pursuant to its authority under the Commerce
Clause: the Constitutional authority for this legislation is provided in Article
I, section 8, clause 3, which grants Congress the power to regulate commerce
with foreign nations, among the several States, and with the Indian tribes. H.
Rep. No. 105-551(II), at 35.
