Free Speech Challenge to Trade Secret Injunction Rejected in California DeCSS Case

In October 1999, Andrew Bunner posted DeCSS—code that can be used to defeat CSS copy protection on DVDs—on his website, and the DVD Copy Control Association (“DVD CCA”) sent notice demanding that he remove it. When Bunner refused, DVD CCA filed an action for injunctive relief, alleging misappropriation of trade secrets under California Civil Code Section 3426.1. (No damages were sought.) The trial court denied DVD CCA a temporary restraining order, but subsequently enjoined Bunner from posting DeCSS or related information on his website. It refused to enjoin Bunner from linking to other websites that contained DeCSS or related information because such an order was “overbroad and extremely burdensome.” Bunner appealed, claiming that the preliminary injunction violated his federal and state constitutional free speech rights. The California Court of Appeals found that the injunction constituted invalid prior restraint on “pure speech”—the code—and distinguished Bunner’s case from other trade secret misappropriation cases involving “the actual use of a secret or the breach of a contractual obligation.” The appeals court further found inapplicable cases granting injunctive relief under copyright law.

The California Supreme Court accepted, as had the appeals court, the trial court’s finding that Bunner, by posting the master keys and algorithms for CSS, had misappropriated trade secrets and that DVD-CCA faced irreparable harm. The court limited its analysis to the question of whether Bunner’s free speech rights trumped the DVD CCA’s otherwise valid claim to injunctive relief. It first concluded, with minimal discussion, that computer code is expressive speech meriting First Amendment protection. The court then turned to what level of scrutiny was warranted: the heightened scrutiny applied to content-based injunctions of speech or the “lesser level of scrutiny” of content-neutral injunctions. “[T]he trial court,” it determined, had “issued the injunction to protect DVD CCA’s statutorily created property interest in information—and not to suppress the content of Bunner’s communications. Because the injunction is justified without reference to the content of Bunner’s communications, it is content neutral.” Restriction of Bunner’s speech and reference to its content was, the court held, merely incidental to the “primary” objectives of state trade secret law: “to promote and reward innovation . . . and maintain commercial ethics.” These objectives were unrelated to the content of DeCSS and the injunction did not favor one viewpoint over another.

Thus applying the lesser level of scrutiny articulated in Madsen v. Women’s Health Center, 512 U.S. 753 (1994), the court found significant government interests in protecting property rights, incentivizing innovation, and maintaining commercial ethics, and held that the injunction “burden[ed] no more speech than necessary to serve” these interests. Noting Bunner’s actual or constructive knowledge that DeCSS had been “acquired by improper means,” the court invoked the rules governing misappropriated land or chattels in the trade secrets context: a person who knowingly acquires or exploits ill-gotten property “should be in ‘no better position than’ the illegal acquirer himself” and cannot prevail against the true owner. The court distinguished between the present case and Bartnicki v. Vopper, 532 U.S. 514 (2001). In Bartnicki, the U.S. Supreme Court refused to award statutory damages and fees after media disclosure of a cellular phone conversation between the plaintiffs, a union president and union negotiator, that had been illegally intercepted by an unidentified third party. While the media knew or had reason to know of the illegal interception, the court ruled that “privacy concerns give way when balanced against the interest in publishing matters of public importance . . . a stranger’s illegal conduct does not suffice to remove the First Amendment shield from speech about a matter of public concern.” The conversation in Bartnicki, which revealed union response to “months of negotiations over the proper level of compensation” for local high school teachers, was adjudged to be of sufficient public importance to evade privacy protection. By contrast, in Bunner, the California Supreme Court held that trade secrets are “purely private information” and not of sufficient “public importance” to raise First Amendment concerns.

In conclusion, the Bunner court characterized its decision as “quite limited”: only if DVD CCA was “likely to prevail on the merits of its trade secret claim,” as had been assumed, would the preliminary injunction pass federal and state constitutional muster. The court remanded the case to the Court of Appeals for de novo review of the factual findings of the trial court to determine whether the preliminary injunction had indeed been properly issued under state trade secret law.

DVD Copy Control Ass’n v. Bunner, No. S102588 (Cal. Aug. 25, 2003).

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