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Court blocks state DVD-cracking suit

The California Supreme Court hands Hollywood a setback, ruling that a Texas resident who posted controversial DVD-cracking code online can't be sued in the Golden State.

The California Supreme Court handed Hollywood's antipiracy efforts a setback Monday, ruling that a Texas resident who posted controversial DVD-cracking code online can't be sued in the Golden State.

The ruling, released by the court Monday, deals with just one part of Hollywood's multifaceted attack on DeCSS, a controversial bit of computer code that can assist in the copying of DVDs. The justices didn't address the legality of posting the software program online, saying only that Texas resident Matthew Pavlovich couldn't be sued in California for doing so.

"There is no evidence in the record suggesting that the site targeted California," the judges wrote in their majority opinion. But that didn't mean he couldn't be sued elsewhere, they noted. "Pavlovich may still face the music--just not in California," the court wrote.

The narrow decision overturns earlier rulings that had been widely criticized in the Internet community. Lower court rulings allowing Pavlovich to be sued would have created "universal jurisdiction" that would let any Web publisher be sued in California, critics contended.

The question of where people can be sued is increasingly common in lawsuits focusing on copyright, e-commerce and other Internet activities. A federal judge in Los Angeles heard a similar question Monday, as attorneys debated whether Kazaa parent company Sharman Networks, which is headquartered in Australia and incorporated in the Pacific island nation of Vanuatu, can be sued in the United States.

In these and previous cases, judges have been loathe to tamper with an earlier law that says defendants must have some substantial contact with people in a given state or have expressly aimed their conduct at residents of that state to be sued there.

Monday's case is one of a handful filed by the DVD Copy Control Association (DVD-CCA)--a trade group that controls the licenses for DVD's antipiracy technology--against people who posted the DeCSS code online. DeCSS itself is a tiny software program written by a Norwegian teenager several years ago that allows DVD movies to be decoded and played on computers running the Linux operating system. Once decoded, the movies can be copied and distributed online, however.

While a student at Indiana's Purdue University, Pavlovich led a project aimed in part at cracking DVD copy-protection technology. He posted the DeCSS code to the project's Web site in late 1999, ultimately drawing the DVD-CCA's attention.

Hollywood studios have mounted other lawsuits against Web publishers who posted DeCSS for breaking federal copyright law. However, the DVD-CCA sued Pavlovich and others for violating California's trade secrets law.

A trial court and California appeals court each had ruled that Pavlovich could be sued in California. Some legal analysts had contended that this marked a considerable expansion of traditional law and would allow Web publishers to be sued anywhere somebody believed their site had an effect.

A majority of the state's Supreme Court, in a 4-3 split decision, disagreed with the lower courts. More evidence was needed that the student had deliberately meant to harm the DVD-CCA or companies based in California, they said.

"Under this logic, plaintiffs connected to the auto industry could sue any defendant in Michigan, plaintiffs connected to the financial industry could sue any defendant in New York, and plaintiffs connected to the potato industry could sue any defendant in Idaho," the judges wrote.

A minority of justices published a lengthy dissent, arguing that the majority had misunderstood the way the Web was used by publishers, and that indeed, Pavlovich had intended his action to affect companies in Hollywood and Silicon Valley.

"Under the majority's rule, the California-centered industries directly targeted by Pavlovich and his numerous Internet colleagues have no recourse for their alleged injury but to pursue a multiplicity of individual suits against each defendant in his or her" home, the minority wrote. "Nothing...compels such an illogical and unfair outcome."

Robert Sugarman, a Weil Gotshal & Manges attorney representing the DVD-CCA, said the group was "disappointed" in the decision but hadn't yet settled on a next step. The decision can be appealed to the U.S. Supreme Court, he said.

Pavlovich's attorney, Allonn Levy, said the federal high court could be interested in the case. "It is a cutting-edge case," he said. "Of course, we're happy with things just the way they are."

Another DeCSS-related case, in which a lower court ruled that barring a defendant from posting the code online would be a violation of free speech rights, is also pending in front of the California high court.