Trade secrets can't be posted online, court rules in DVD case

Tuesday, August 26, 2003

SAN FRANCISCO -- In a closely watched case that pitted free speech against the protection of trade secrets, the California Supreme Court ruled Monday that courts may be able to block computer users from posting on the Internet a code for illegally copying DVD movies.

The justices did not resolve whether the code was, in fact, a trade secret, leaving that for a lower court to determine. They did rule, however, that they would not tolerate the posting of legitimate trade secrets online, and reversed a lower court that said disseminating trade secrets is protected by the First Amendment right to freedom of speech.

The case centered on San Francisco computer programmer Andrew Bunner, who in 1999 posted the code to crack the encryption technology and, according to the movie industry, helped users replicate thousands of copyright movies per day.

The DVD Copy Control Association, an arm of Hollywood studios, said it controls the encryption system, which scrambles data to prevent unauthorized copying of a movie sold in the DVD format. The association sued Bunner and others under California's Uniform Trade Secrets Act.

A state judge in San Jose ordered Bunner to remove the encryption-cracking code from the Internet. But an appeals court in San Jose lifted that injunction, saying that protecting trade secrets is not as important as freedom of speech.

A unanimous Supreme Court, however, ruled otherwise Monday.

Justice Janice Rogers Brown, in reversing the appeals court on a 7-0 vote, said an order to remove the code "does not violate the free speech clauses of the United States and California constitutions."

The justices ruled that neither Bunner nor others have a free-speech right to post trade secrets. The high court ordered the San Jose-based appeals court to analyze whether the code is still a protected trade secret given its widespread exposure.

The DVD association hailed Monday's decision.

"This opinion has wide applications to trade-secret law," said association attorney Robert G. Sugerman. "Owners of trade secrets can now protect those trade secrets."

The industry had argued that trade secrets would be plundered if computer users were free to post them. Companies such as Boeing, Ford and AOL-Time Warner urged the justices to side with the DVD association, arguing that trade-secret protections trump First Amendment speech protections.

Bunner did not devise the encryption code but posted it on one of his Web sites. The Norwegian teen who cracked the code, Jon Johansen, was acquitted in January of charges he stole trade secrets.

Bunner, 26, said he has removed any reference to the code from the Internet and is fighting the case to stand up for free speech rights. He said he posted the code to let others play DVDs on their computers.

His attorney, David A. Greene, said the appeals court could still ultimately support Bunner's actions because the code's global dissemination may have caused it to lose its trade-secret status.

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