A Santa Clara County, Calif., judge yesterday rejected the industry's request for a temporary restraining order against the 72 named and anonymous individuals who stand accused of trade secrets violations for helping distribute a program known as DeCSS on the Web. The judge's rejection came a day after the complaint was filed.
Another hearing on the matter is scheduled for Jan. 14, but legal experts say the movie industry, represented as plaintiffs by a group called the DVD Copy Control Association, may have a hard time proving the Web owners have done anything unlawful.
One attorney said that bringing the case under California's state trade secrets laws was a novel tactic in such a case.
"This is a new area of the law in terms of the facts," said Ronald Coolley, an attorney with the Chicago office of Houston-based law firm Arnold White & Durkee.
But Coolley and other attorneys said the plaintiffs are likely to face serious difficulties in making the charges stick.
California's trade secrets laws require the plaintiff to prove that a third-party user knew the material was protected and intended to commit further harm by distributing the information, Coolley said.
Those immediately involved in cracking the DVD encryption code could stand some risk under the law, he said. But it could be more difficult to implicate others who merely made available copies of the program.
"If they had knowledge, and intent, then the defendants could be held liable," he said. "Clearly, the judge had a question in his mind as to whether this could be proven."
Attorney Jeff Schwartz, a partner of the Washington, D.C.-based firm McKenna & Cuneo, agreed that the plaintiffs face a difficult case.
The DVD coalition should not have trouble proving that the information they owned was secret and that it was appropriately controlled, Schwartz said. But the industry will have trouble "showing how an individual accused in the lawsuit has somehow done something wrong," he said. "They're going to have a hard time tracking people down to determine if [the decoding] information was obtained illegally."
"It's an interesting paper they've filed," he said. "They infer dastardly deeds, suggesting illegal piracy and violation of terms of various licensing agreements, but they don't provide a linkage to the people they are accusing of misappropriation."
The DVD group was formed in December last year by companies that also are members of the Motion Picture Association of America (MPAA), the Business Software Alliance and the Electronic Industries Alliance to license out the DVD Content Scrambling System--a technology used by all major U.S. movie studios to prevent people from playing DVDs on unauthorized players.
In October, a 16-year-old Norwegian student posted on the Internet a program that defeats the security software on DVD-formatted movies. He has since stopped posting the information, according to sources familiar with the case, but others on the Web have distributed the information.
The lawsuit seeks to put an end to the distribution.
But according to the defendants, DeCSS was developed to provide interoperability with Linux, a format they say was not supported by the film industry. Such an action would be allowed under the Digital Millennium Copyright Act.
The case also raises questions about the legality of the reverse engineering of DVD's copy-protection scheme.
Coolley said again that issues of knowledge and intent could give plaintiffs headaches on this front.
"You apply the Coke test," he said. "If someone takes Coca-Cola to the lab, analyzes it and figures out how to make it, that's perfectly legal."
He said the situation becomes more complex when trade secret information is inadvertently made available to the public, as was the case in the creation of DeCSS. RealNetworks' Xing DVD player lacked the traditional encryption that protects most software DVD players, allowing developers to create software that de-scrambles the encryption on a DVD movie and compresses the file to a manageable size.
"The question is whether the DeCSS developers knew they were dealing with trade secret information and intended to commit harm through their actions," he said.
News.com's Evan Hansen contributed to this report.