ORDER GRANTING SUMMARY JUDGMENT
The above-captioned matter came on regularly for hearing before the Honorable Judge Marilyn L. Huff on April 26, 1993. Thomas M. Small appeared for plaintiffs and Toby L. Plevin appeared for defendant. Considering all of the papers, pleadings, motions and declarations before the court, and after hearing the matter, the court finds that no material issue of fаct exists and plaintiffs are entitled to judgment as a matter of law on the copyright and trade secret claims.
1. Standard for summary judgment
A motion for summary judgment shall be granted where “there is no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c);
British Airways Bd. v. Boeing Co.,
*632 2. Application of standard
a. Copyright claims
There are two elements to be proven in a coрyright infringement action: (1) ownership of a valid copyright, and (2) copying of the copyrighted work.
Data East USA, Inc. v. Epyx, Inc.,
Nor is there a genuine issue of fact regarding defendant’s copying of, or directing the copying of, the copyrighted works. The undisputed evidence shows that defendant copied or directed her students to copy plaintiffs’ copyrighted materials as part of a “Dynamism” coursе which she offered for sale. See Declaration of Gerri Salinas (“Salinas Decl.”), ¶¶ 4-5, 8-11; Pisani Decl., ¶¶ 5, 7; Cartwright Decl., ¶¶ 5, 7; McShane Decl., ¶¶ 7, 9-10. Specifically, defendant would either copy the materials herself, or would give them to her students to copy. See Salinas Decl., ¶ 8; Deposition of Enid Vien (“Vien Depo.”), Vol. I, p. 44, lines 3-20, p. 45, lines 15-21; p. 80, lines 8-19; Vol. II, P. 23, lines 2-12; p. 96, lines 1-12; p. 143, line 18 — p. 144, line 8; Deposition of Mary Volk (“Volk Depo.”), p. 25, line 17 — p. 26, line 11. Additionally, defendant admitted in her November 4, 1992 Declaration that she must use bootleg or copied materials as part of the courses she offers her students.
Defendant’s declaration in opposition to this motion contends that she never copied, or directed the copying of, the sound recordings. However, this is contradicted by her priоr declaration and deposition testimony and, therefore, does not create a
genuine
issue of material fact.
Harkins Amusement Enterprises, Inc. v. General Cinema Corp.,
b. Sound recordings made prior to February 15, 1972
There is also no factual dispute that defendant copied, or directed the copying of, L. Ron Hubbard’s tape recorded lectures which were fixed on tape prior to February 15, 1972 and, therefore, are protected under California Civil Code section 980(a)(2).
See Goldstein v. California,
c. Trade secret claim
Finally, no genuine issue of fact exists as to whether defendant misappropriated plaintiffs’ trade secrets in the works known generally as the “Advanced Technology.” California Civil Code section 3426.1 defines a “trade secret” as information which has independent economic value from not being generally known, the secrecy of which has been reasonably protected, or reasonably attempted to be protected. A trade secret is misapрropriated when, among other things, it is disclosed or used by another without consent, and at the time of disclosure or use that person knew the secret was acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use. Cal.Civ.Code § 3426.1(b). Similarly, under the common
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law, a trade secret is determined by the extent to which the secrecy of the information is guarded, and according to the value of the information to the possessor and its competitors.
See
Restatement (First) of Torts, § 757, comment 6;
Chicago Lock Co. v. Fanberg,
The court finds that as a matter of law, plaintiffs’ “Advanced Technology” qualifies as a trade secret, and that no factual-dispute exists regarding defendant’s misappropriation of these works through the courses offered to her students. See Vien Depo., Vol. I, p. 97, lines 5-10; p. 98, lines 8-18; Salinas Decl., ¶ 8; McShane Decl., ¶¶ 7, 10, Exhibit C.
1.Secrecy of materials
There is no factual dispute about whether plaintiffs have used reasonable steps to keep the materials secret. The Advanced Technology is confidential and kept under tight security, is disclosed only to those who have attained the requisite level of spiritual training, and cannot be accessed without first signing an agreement to maintain its secrеcy and confidentiality. See McShane Decl., ¶¶ 3-4. Indeed, plaintiff knew of the confidential nature of the materials and signed a confidentiality agreement prior to their disclosure to her. See Vien Depo., Vol. I, p. 59 line 18-p. 60, line 12; Vien Depo. Vol. II, p. 25, line 5-p. 27, line 10, Exhibits 7 and 8 thereto; p. 31, line 4-p. 32, line 15.
Defendant attempts to create a factual issue about the secrecy of a рortion of the Advanced Technology called “Power Processes,” or “5 and 5a Processing,” by declaring in opposition that she “studied [that portion] at a time when they were not deemed to be secret.” However, this declaration is directly contradicted by defendant’s earlier deposition testimony and the confidentiality agreement and, therefore, doеs not create a genuine issue of material fact. See McShane Decl., ¶ 12, Exhibits A, B, and C, attached to Reply; Declaration of Howard Gutfeld, ¶¶ 3-5, attached to Reply; Vien Depo., p. 11, fine 6-p. 12, line 16, p. 15, fine 17, p. 16, fines 1-16, p. 27, fines 13-14, attached to Reply.
Defendant also argues that other “issues of fact” remain as to the trade secret claim. These arguments are without merit. Defеndant first claims that a certain portion of the Advanced Technology, known as “OT 3,” has been repeatedly reported in print and broadcast media, thereby stripping its trade secret status. However, plaintiffs claim these publications are distortions of the secret materials and, therefore, plaintiffs make no claim of trade secret status or confidentiаlity as to any of these stories. Moreover, plaintiffs concede that any information in these stories should be excepted from any injunction this court might order. See McShane Decl., ¶¶ 7-11, attached to Reply.
Defendant next argues that plaintiffs cannot gain trade secret status for a portion of the Advanced Technology known as “NOTS,” because a previous court, in a previous ease with different defendants, dismissеd trade secret claims on that material as a discovery sanction. Defendant offers no authority for this contention. Indeed, as the substantive merits of the earlier trade secret claim were not necessarily and finally adjudicated upon, and defendant was not a party to that suit, it appears that case has no res judicata or collateral estoppel effect here.
See generally Federated Dept. Stores v. Moitie,
2. Independent economic value
Finally, there is no factual dispute as to the independent economic value of the Advanced Technology. It clearly has value to plaintiffs, who use proceeds from the sale of these materials, as well as other materials, to support the operations of Scientology Churches world-wide.
See
McShane Decl., ¶ 12. Indeed, thе Supreme Court has recognized the economic need for churches to receive such proceeds, noting that “[i]t is plain that a religious organization needs funds to remain a going concern.”
Murdock v. Commonwealth of Pennsylvania,
Therefore, as no genuine issue of fact exists, the court finds as a matter of California statutory and common law that defendant has misappropriated plaintiffs’ trade secrets.
3. Defenses common to all claims
a. Statute of limitations.
Defendant argues, for the first time, that all claims in this action are barred by the statutе of limitations. 1 In support of this argument defendant offers evidence that, in 1984, plaintiffs’ officers had asked about defendant’s knowledge of the Advanced Technology materials and were told she had those materials in her possession. See Declarations of Enid Vien and Lauren Allen attached to Opposition to Summary Judgment. However, these declarations reveal plаintiffs’ representatives were also assured that defendant had not distributed or disclosed these materials. As defendant has the burden of proof on this affirmative defense, she must come forward with evidence that plaintiffs were on notice of all the elements of a trade secret violation. To the contrary, her evidence actually supports plaintiffs’ position that they did not have such knowledge.
Defendant argues plaintiffs must have known about defendant’s infringing activities because they knew she left the Church of Scientology to start her own ministry. This argument is without merit. Plaintiffs had always permitted Ms. Vien to learn and study the Advanced Technology pursuant to the above-referenced confidentiality agreement. The fact she may have had actual copies of the Advanced Technology, as opposed to her own notes and mental impressions, does not create an issue regarding plaintiffs’ knowledge of all the elements of trade secret misappropriation. The argument that plaintiffs should have known that defendant would have disclosed the Advanced Technology to her students is also without merit. There is no evidence that plaintiffs knew of the potential use, if any, Ms. Vien might have for the Advanced Technology in her ministry.
The court finds these declarations fail to establish, or even raise a factual issue, that plaintiffs had knowledge, dating back to 1984, of any of the violations alleged in the complaint. The statute of limitations defense is, therefore, without merit.
See Intermedics, Inc. v. Ventritex, Inc.,
Indeed, on the federal and state copyright claims, even if defendant’s declarations establish plaintiffs’ knowledge of defendant’s unauthorized copying in 1984, there is substantial, uncontroverted evidence that defendant hаs violated these copyrights within three years of the instant suit.
2
Accordingly, these claims were timely filed.
See Hoey v. Dexel Systems Corp.,
b. First amendment.
As this court stated in its Order Granting Preliminary Injunction, plaintiffs’
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claims for copyright and trade secret protection are not barred by the religious nature of the works. The court expressly held that enforcing plaintiffs’ rights in these works violated neither the establishment clause nor the free exercise clause.
See United Christian Scientists v. Christian Science Bd. of Directors, First Church of Christ Scientist,
Defendant argues that bеcause plaintiffs refuse to sell defendant the materials she needs to practice her religion, enforcing the copyrights and trade secret rights restricts her free exercise of religion, and unconstitutionally prefers the religion of Scientology over defendant’s religion. Defendant has offered no authority supporting this contention. Rather, the case law сited supports the proposition that neutral application of copyright and trade secret law to religious works does not offend the constitution.
4. Specific defenses
a. Fair use of the copyrighted works.
Defendant raises, for the first time, the applicability of the “fair use doctrine” to the works at issue. Section 107 of the Copyright Act provides that
the fair use of a copyrighted work ... for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—
(1) the purpose and character of the use, including whether such use is of a commercial nаture or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.
In determining “fair use” under the statute, it is necessary to balance the four factors flexibly.
Fisher v. Dees,
The first factor weighs against a finding of fair use. The uncontroverted evidence shows that defendant uses the copyrighted works as an integral part of the Dynamism courses she sells to her students.
See
Salinas Decl., ¶¶ 4-5, 6, 8-11, Exhibit B; Pisani Decl., ¶¶ 5, 7; Cartwright Decl., ¶¶ 5, 7; McShane Decl., ¶¶ 7, 9-10; Vien Depo., Vol. II, p. 23, lines 2-12; p. 96, lines 1-12; p. 143, line 18 — p. 144, line 8. Indeed, defendant аdmits to having earned up to $12,000 a year for the ten years she has been offering these courses.
See
Vien Decl., ¶ 6, attached to Opposition. In general, commercial use of copyrighted material is presumptively unfair
(Sony Corp. of America v. Universal City Studios, Inc.,
The second factor also weighs against a finding of fair use. When the nature of the copyrighted works is creative, as opposed to informational, use of those works is less likely to be deemed fair.
See
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Abend v. MCA Inc.,
The third factor also weighs against defendant. The undisputed facts show that defendant has substantially copied each work at issue, and in some cases the whole work.
See
Pisani Decl., ¶ 7; Cartwright Decl., ¶ 7; McShane Decl., ¶ 9. This weighs heavily against a finding of fair use, especially considering the commercial nature of the use.
See, e.g., Marcus,
The fourth factor concerns “the effect of the use upon the potential market for or value of the copyrighted work.” 17 U.S.C. § 107. As this court discussed previously in the trade secret context, since defendant uses the works for the same purpose intended by plaintiffs, it appears defendant’s unauthorized copies fulfill “the demand for the original” works and “diminish or prejudice” their potential sale.
See Hustler Magazine, Inc. v. Moral Majority, Inc.,
Finally, the court finds defendant’s use does not fit within the special guidelines approved by Congress as to fair use in the educational context.
See
Notes of Committee on the Judiciary, House Rep. No. 94-1476,
reprinted in
17 U.S.C.A. pp. 113-14;
Marcus v. Rowley,
Under the circumstances of this case, and after balancing the four statutory factors, as well as the Congressional guidelines on fair use in the educational context, the court finds as a matter of law that defendant is not entitled to fair use protection.
See Marcus,
5. Permanent injunction
Plaintiffs have requested permanent in-junctive relief on the four claims at issue. As plaintiffs are entitled to summary judgment on those claims, the court will grant such relief.
See
17 U.S.C. § 502 (“[a]ny court having jurisdiction of a civil action arising under this title may ... grant ... final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright”); Cal.Civ.Code § 3426.2(a) (“[a]ctual or threatened misappropriation [of a trade secrеt] may be enjoined”);
Chicago Lock Co. v. Fanberg,
IT IS SO ORDERED.
Notes
. The relevant statute of limitations are: 17 U.S.C. § 507 (3 years for federal copyright claims); Cal.Civ.Proc.Code § 338(1) (3 years fоr state copyright claims based on Cal.Civ.Code § 980(a)(2)); Cal.Civ.Code § 3426.3 (3 years for trade secret misappropriation).
. It should be noted, however, that defendant’s declarations merely point to plaintiffs' alleged knowledge of Ms. Vien's possession of portions of the Advanced Technology materials. There is no evidentiary basis to find that, dating back to 1984, plaintiffs' knew of defendant's unauthorized copying of any of the materials at issue.