DVD Copy Control Ass'n v. Bunner

DVD Copy Control Ass'n v. Bunner, 31 Cal.4th 864, 75 P.3d 1, 68 U.S.P.Q.2d (BNA) 1385 (2003).

Factual Background
The DVD Copy Control Association is a movie industry trade group that controls the rights to the “content scramble system” (CSS) used to encrypt movie DVDs. The trade secret at issue in the Association’s lawsuit against Bunner is a piece of code known as a “master key” that is used by properly-licensed DVD players to decrypt movie DVDs. The DeCSS software posted on Bunner’s website revealed the “master key.”

Trial Court Decision
The trial court granted the Association’s request for a preliminary injunction barring Bunner from continuing to distribute DeCSS.

Appellate Court Decision
On appeal, the California Court of Appeal assumed that Bunner had violated California’s trade secrets law. But the appellate court went on to hold that the injunction violated Bunner’s First Amendment free speech rights.

Supreme Court Decision
The Association then appealed, and in an opinion by Justice Janice Brown, the California Supreme Court reversed the Court of Appeal. Justice Brown agreed with Bunner that “restrictions on the dissemination of computer codes in the form of DeCSS are subject to scrutiny under the First Amendment.” On the other hand, the Justice agreed with the Association that the preliminary injunction it had won was “content neutral,” because the purpose of the injunction was “to protect [the Association’s] statutorily created property interest in information and not to suppress the content of Bunner’s communications.”

This meant that the injunction was permissible under the First Amendment, so long as it burdened no more speech than was necessary in order to serve a significant government interest. Justice Brown ruled that California’s trade secret law does serve the significant government interest of “encouraging innovation and development.” And she concluded that the preliminary injunction burdened no more speech than was necessary to protect that interest. Indeed, Bunner himself offered no less restrictive way of protecting the Association’s trade secrets. Justice Brown also rejected Bunner’s argument that the injunction was a prior restraint.

However, in the final part of her opinion, Justice Brown emphasized what she described as the “limited” nature of the decision. “We merely hold,” she said, “that the preliminary injunction does not violate the free speech clauses of the United States and California Constitutions, assuming the trial court properly issued the injunction under California’s trade secret law.” Justice Brown remanded the case to the Court of Appeal, saying it “should determine the validity of this assumption.”

In a lengthy concurring opinion, Justice Carlos Moreno explained why that assumption may not be correct. “Bunner is alleged to have downloaded [the DeCSS source code] from the Internet. . . .” In Justice Moreno’s opinion, this was fatal to the Association’s case as a matter of trade secret law, because: “The general rule is that ‘[o]nce the secret is out, the rest of the world may well have a right to copy it at will; but. . . not. . . the misappropriator or his privies.’. . . DeCSS was not demonstrably secret in this case when Bunner republished it, and Bunner was neither alleged to be the original misappropriator nor to be in privity with any such misappropriators.”

Justice Moreno acknowledged that the Association may have a sound case against Bunner, on other grounds. “It may or may not be the case that Bunner’s action violated the Digital Millennium Copyright Act (DMCA). . . ,” he noted. “Unlike trade secret law, the DMCA does not inquire into whether technology-circumventing devices are. . . based on secret information. . . . [The Association’s] complaint did not allege a violation of the DMCA and that issue is not before us. All I would decide is that it is manifest from the record that the [Association] did not establish a likelihood of prevailing on its trade secret claim.”