Lead Opinion
Opinion
Today we resolve an apparent conflict between California’s trade secret law (Civ. Code, § 3426 et seq.)
I.
A.
Digital versatile discs (DVD’s) “are five-inch wide disks capable of storing more than 4.7 [Gigabytes] of data. In the application relevant here, they are used to hold full-length motion pictures in digital form. They are the latest technology for private home viewing of recorded motion pictures and result in drastically improved audio and visual clarity and quality of motion pictures shown on televisions or computer screens.” (Universal City Studios, Inc. v. Reimerdes (S.D.N.Y. 2000)
“[T]he improved quality of a movie in a digital format brings with it the risk that a virtually perfect copy, i.e., one that will not lose perceptible quality in the copying process, can be readily made at the click of a computer control and instantly distributed to countless recipients throughout the world over the Internet.” (Universal City Studios, Inc. v. Corley (2d Cir. 2001)
The motion picture, computer, and consumer electronics industries decided to use the CSS technology to encrypt copyrighted content on DVD’s and agreed that this content should not be subject to unauthorized (i) copying or (ii) transmission, including making the content available over the Internet. To this end, they began licensing the technology in October 1996. Under the terms of the licensing agreement, licensees had to maintain the confidentiality of proprietary information embodied in the CSS technology, including the “master keys” and algorithms. The agreement also contained other terms and conditions designed to ensure the confidentiality of this proprietary information. These industries later established the DVD Copy Control Association, Inc. (DVD CCA), as the entity charged with granting and administering the licenses to the CSS technology.
Despite these efforts to safeguard the CSS technology, Jon Johansen, a Norwegian resident, acquired the proprietary information embodied in the technology—including the master keys and algorithms—by reverse engineering software created by a licensee, Xing Technology Corporation (Xing). Xing’s software is licensed to users under a license agreement, which specifically prohibits reverse engineering. Using the proprietary information culled from this software, Johansen wrote a program called DeCSS that decrypts movies stored on DVD’s and enables users to copy and distribute these movies. According to DVD CCA, DeCSS “embodies, uses, and/or is a substantial derivation of confidential proprietary information” found in the
Soon thereafter, DeCSS appeared on other Web sites, including a Web site maintained by Andrew Bunner. Bunner posted DeCSS on his Web site allegedly because “it would enable ‘Linux’ users to use and enjoy ‘DVDs’ available for purchase or rental in video stores” and “make ‘Linux’ more attractive and viable to consumers.” Bunner also claimed he wanted “to ensure [that] programmers would have access to the information needed to add new features, fix existing defects and, in general, improve the ‘[D]eCSS’ program.”
B.
Upon discovering the posting of DeCSS on the Internet, DVD CCA and the Motion Picture Association (MPA) made extensive efforts to identify those Web sites disclosing proprietary CSS technology or linking to sites posting this information. The MPA then sent notices to these Web sites and their Internet service providers demanding that they remove this information from the sites. Despite receiving these notices, many of these Web sites refused to remove the information. DVD CCA then filed this action against Bunner and numerous other named and unnamed individuals who had published or linked to Web sites publishing DeCSS (collectively defendants), alleging trade secret misappropriation.
In the complaint, DVD CCA did not seek damages. Instead, it only sought an order “enjoining and restraining [defendants . . . from making any further use or otherwise disclosing or distributing, on their web sites or elsewhere, or
Soon after filing the complaint, DVD CCA filed an ex parte application for a temporary restraining order (TRO). The trial court denied the request for a TRO but issued an order to show cause “why the injunction and restraints sought in [DVD CCA’s] proposed preliminary injunction should not be entered against defendants . . . .”
Following a hearing and after considering written declarations submitted by the parties, the trial court issued a preliminary injunction. The injunction enjoined the named defendants, including Bunner, from “[pjosting or otherwise disclosing or distributing, on their [W]eb sites or elsewhere, the DeCSS program, the master keys or algorithms of the Content Scrambling System .. ., or any other information derived from this proprietary information.” The court, however, refused to enjoin the defendants from “linking to other [Web sites] which contain the protected materials” because “such an order [would be] overbroad and extremely burdensome.”
In issuing the injunction, the court concluded that DVD CCA was likely to prevail on the merits and would suffer irreparable harm without injunctive relief. First, the court concluded that the CSS technology contained protect-able trade secrets because it derived independent economic value from its secrecy and because DVD CCA made reasonable efforts to maintain its secrecy. Second, the court found that Johansen had obtained these trade secrets through reverse engineering in violation of a license agreement and therefore acquired these secrets by improper means. Third, the court found that the defendants, including Bunner, knew or should have known that Johansen acquired these trade secrets by improper means when they posted DeCSS on their Web sites. Fourth, the court held that the trade secret status of the CSS technology had not been destroyed because it had been posted on the Internet. Fifth, the court concluded that DVD CCA would suffer irreparable harm without an injunction. “If the Court does not immediately enjoin the posting of this proprietary information, [DVD CCA’s] right to protect this information as secret will surely be lost . . . .” The court then observed that an injunction would cause minimal harm to the defendants. Finally, the court acknowledged potential enforcement problems, but held that “a possibility or even a likelihood that an order may be disobeyed or not enforced in other jurisdictions is not a reason to deny the relief sought.”
II.
California has adopted without significant change the Uniform Trade Secrets Act (UTSA). (§ 3426 et seq.; see Cadence Design Systems, Inc. v. Avant! Corp. (2002)
Trade secret misappropriation occurs whenever a person: (1) acquires another’s trade secret with knowledge or reason to know “that the trade secret was acquired by improper means” (§ 3426.1, subd. (b)(1)); (2) discloses or uses, without consent, another’s trade secret that the person “[u]sed improper means to acquire knowledge of ” (id., subd. (b)(2)(A)); (3) discloses or uses, without consent, another’s trade secret that the person, “[a]t the time of disclosure or use, knew or had reason to know that his or her knowledge of the trade secret was” (a) “[d]erived from or through a person who had utilized improper means to acquire it” (id., subd. (b)(2)(B)(i)), (b) “[a]cquired under circumstances giving rise to a duty to maintain its secrecy or limit its use” (id., subd. (b)(2)(B)(ii)), or (c) “[d]erived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use” (id., subd. (b)(2)(B)(iii)); or (4) discloses or uses, without consent, another’s trade secret when the person, “[b]efore a material change of his or her position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake” (id., subd. (b)(2)(C)).
California’s trade secret law provides a trade secret owner with several remedies against a misappropriator, including injunctive relief. Indeed, section 3426.2, subdivision (a) expressly states that “[a]ctual or threatened misappropriation may be enjoined.” Thus, California law clearly contemplates the use of injunctive relief as a remedy for trade secret misappropriation.
As relevant here, DVD CCA sought and obtained only injunctive relief against Bunner. On review, the Court of Appeal did not examine the trial court’s underlying factual findings. Instead, it assumed that these findings justified “injunctive relief in the absence of any free speech concerns” under California’s trade secret law. The appellate court, nonetheless, held that the injunction violated Bunner’s free speech rights under the First Amendment and reversed.
Because of the unusual procedural posture of this case, we follow the lead of the Court of Appeal and assume as true the trial court findings in support of the preliminary injunction. (Cf. Bartnicki v. Vopper (2001)
A.
In answering this question, we must first determine whether restrictions on the dissemination of computer codes in the form of DeCSS are subject to scrutiny under the First Amendment. We conclude they are.
“ ‘[A]ll ideas having even the slightest redeeming social importance,’ including those concerning ‘the advancement of truth, science, morality, and arts’ have the full protection of the First Amendment.” (Junger v. Daley (2000)
As such, “[i]t cannot seriously be argued that any form of computer code may be regulated without reference to First Amendment doctrine.” (Reimerdes, supra,
“As computer code ... is a means of expressing ideas, the First Amendment must be considered before its dissemination may be prohibited or regulated .... But that conclusion still leaves for determination the level of scrutiny to be applied in determining the constitutionality of’ an injunction prohibiting the dissemination of computer code.
“Our principal inquiry in determining content neutrality is whether the government has adopted a regulation of speech ‘without reference to the content of the regulated speech.’ ” (Madsen, supra,
Applying this standard, we conclude that the preliminary injunction at issue here is content neutral. The underlying basis for the injunction is the trial court’s holding that Bunner misappropriated DVD CCA’s property—its
Indeed, the governmental purpose behind protecting trade secrets like the CSS technology through injunctive relief is wholly unrelated to their content. “Trade secret law promotes the sharing of knowledge, and the efficient operation of industry; it permits the individual inventor to reap the rewards of his labor by contracting with a company large enough to develop and exploit it.” (Kewanee Oil Co. v. Bicron Corp. (1974)
The fact that the preliminary injunction identifies the prohibited speech by its content does not make it content based. “An injunction, by its very nature, applies only to a particular group (or individuals) and regulates the activities, and perhaps the speech, of that group. It does so, however, because of the group’s past actions in the context of a specific dispute between real parties. The parties seeking the injunction assert a violation of their rights; the court hearing the action is charged with fashioning a remedy
Bartnicki, supra,
Under the Madsen test, “when evaluating a content-neutral injunction . .'. [w]e must ask . . . whether the challenged provisions of the injunction burden no more speech than necessary to serve a significant government interest.” (Madsen, supra,
As a threshold matter, a preliminary injunction properly issued under California’s, trade secret law undoubtedly serves significant government interests. “Trade secrets . . . offer no protection against independent invention.” (Epstein, Privacy, Publication, and the First Amendment: The Dangers of First Amendment Exceptionalism (2000) 52 Stan. L.Rev. 1003, 1036 (Privacy, Publication, and the First Amendment).) Rather, “[t]he basic logic of the common law of trade secrets recognizes that private parties invest extensive sums of money in certain information that loses its value when published to the world at large.” (Id. at p. 1035.) Based on this logic, trade secret law creates a property right “defined by the extent to which the owner of the secret protects his interest from disclosure to others.” (Monsanto, supra,
By creating a limited property right in information, trade secret law “acts as an incentive for investment in innovation.” (Prior Restraints and Intellectual Property, supra, 12 Fordham Intell. Prop. Media & Ent. L.J. at p. 60.) “Trade secret law encourages the development and exploitation of those items of lesser or different invention than might be accorded protection under the patent laws, but which items still have an important part to play in the technological and scientific advancement of the Nation.” (Kewanee, supra,
Assuming, as we do, that the trial court properly granted injunctive relief under California’s trade secret law, its preliminary injunction burdens no more speech than necessary to serve these significant government interests. First, prohibiting the disclosure of trade secrets acquired by improper means is the only way to preserve the property interest created by trade secret law and its concomitant ability to encourage invention. “Trade secrets are a peculiar kind of property. Their only value consists in their being kept private.” (In re Iowa Freedom of Information Council (8th Cir. 1983)
The First Amendment does not prohibit courts from incidentally enjoining speech in order to protect a legitimate property right. (See SFA&A, supra, 483 U.S. at pp. 526, 537-540 [holding that a statutory injunction prohibiting promotional uses of the word “Olympic” without a showing of a likelihood of confusion does not violate the First Amendment].) And “[t]he mere fact that” Bunner “claims an expressive . . . purpose does not give [him] a First Amendment right to ‘appropriate] to [himself] the harvest of those who have sown.’ ” (Id. at p. 541, quoting International News Service v. Associated Press (1918)
By prohibiting Bunner from exploiting and destroying DVD CCA’s trade secrets because of his actual or constructive knowledge of its illegal acquisition, the preliminary injunction merely applies this venerable standard of commercial ethics to a constitutionally recognized property interest in information. Because a person who knowingly exploits the illegal acquisition of property owned by another should be in “no better position than” the illegal acquirer himself (Wendling Lumber, supra,
Nonetheless, Bunner contends the preliminary injunction does not satisfy the Madsen test because it enjoins disclosures by those with no connection to DVD CCA or those people who acquired its trade secrets by improper means. According to Bunner, the United States Supreme Court in Bartnicki established that limitations on the disclosure of information by those who merely know or have reason to know that the information was obtained unlawfully violate the First Amendment. But Bartnicki is distinguishable.
In Bartnicki, an unidentified person illegally intercepted and recorded a cell phone conversation between a union negotiator and the union president (the
The United States Supreme Court, however, expressly declined to extend Bartnicki to “disclosures of trade secrets or domestic gossip or other information of purely private concern.” (Bartnicki, supra,
In this case, the content of the trade secrets neither involves a matter of public concern nor implicates the core purpose of the First Amendment. “Whether . . . speech addresses a matter of public concern must be determined by the content, form, and context of a given statement, as revealed by the whole record.” (Connick v. Myers (1983)
The mere fact that DVD CCA’s trade secrets may have some link to a public issue does not create a legitimate public interest in their disclosure. (Cf. Board of Trustees of the State University of New York v. Fox (1989)
Finally, the preliminary injunction does not burden more speech than necessary by prohibiting the disclosure of “information derived from” “the DeCSS program, the master keys or algorithms of the [CSS].” Because we assume for purposes of this appeal that the injunction is justified under California’s trade secret law, we also assume that this provision of the injunction is necessary to protect DVD CCA’s property interest in the misappropriated trade secrets.
The preliminary injunction issued by the trial court therefore burdens no more speech than necessary to serve the significant government interests promoted by California’s trade secret law. Accordingly, it satisfies the Madsen test.
D.
Although the preliminary injunction issued by the trial court survives the Madsen test, we must still determine whether the prior restraint doctrine bars it. Because the injunction is content neutral and was issued because of
“[P]rior restraints on speech and publication are the most serious and the least tolerable infringement on First Amendment rights.” (Nebraska Press Assn. v. Stuart (1976)
Despite these pronouncements, the United States Supreme Court has “neither defined prior restraint, nor explained precisely why injunctions fit within a definition of prior restraint.” (Meyerson, Rewriting Near v. Minnesota: Creating a Complete Definition of Prior Restraint (2001) 52 Mercer L.Rev. 1087, 1087.) Nonetheless, the court has provided some guiding principles. For example, the court has recently held that only content-based injunctions are subject to prior restraint analysis. (See Thomas v. Chicago Park District (2002)
Applying these principles, we find that the preliminary injunction at issue here is not a prior restraint. The injunction is content neutral (see ante, at pp. 877-879), and the trial court found that Bunner had previously disclosed DVD CCA’s trade secrets in violation of California law. The court therefore issued the content-neutral injunction because of Bunner’s “prior unlawful conduct.” (Madsen, supra,
CBS Inc. v. Davis (1994)
Likewise, the out-of-state cases cited by Bunner are not persuasive. In Bridge C.A.T. Scan Associates v. Technicare Corp. (2d Cir. 1983)
Oregon ex rel. Sports Mgmt. News v. Nachtigal (1996)
Proctor & Gamble Co. v. Bankers Trust Co. (6th Cir. 1996)
We now turn to Bunner’s final contention—that the preliminary injunction violates the free speech provision found in article I, section 2, subdivision (a) of the California Constitution. “[T]he California Constitution is independent and . . . federal decisions interpreting the First Amendment are not controlling.” (Los Angeles Alliance, supra,
V.
Our decision today is quite limited. We merely hold 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. On remand, the Court of Appeal should determine the validity of this assumption. Because there appears to be some confusion over the proper standard of review, we offer guidance below.
In upholding the preliminary injunction against Bunner’s First Amendment challenges, we rely on the assumption that DVD CCA is likely to prevail on the merits of its trade secret claim against Bunner. As such, “any factual findings subsumed” in the trade secret misappropriation determination “are subject to constitutional fact review.” (Rankin v. McPherson (1987)
On remand, the Court of Appeal must therefore “make an independent examination of the entire record” (Bose Corp. v. Consumers Union of U.S., Inc. (1984)
DISPOSITION
We reverse the judgment of the Court of Appeal and remand for further proceedings consistent with this opinion.
George, C. J., Baxter, J., Rivera, J.,
Notes
All further statutory references are to the Civil Code unless otherwise indicated.
“The text of programs written in [computer programming] languages is referred to as source code. And whether directly or through the medium of another program, the sets of instructions written in programming languages—the source code—ultimately are translated into machine ‘readable’ strings of l’s and 0’s, known in the computer world as object code, which typically are executable by the computer.” (Reimerdes, supra,
As we explained in Pavlovich v. Superior Court (2002)
Following the filing of this action, Bunner apparently removed DeCSS from his Web site.
Therefore, we need not decide whether the proprietary CSS technology is part of the public domain and no longer a protectable trade secret or whether Johansen acquired the trade secrets by improper means when he reverse engineered the Xing software in violation of a license agreement. We also decline to address Bunner’s contention that the preliminary injunction violates the intellectual property clause of the United States Constitution (U.S. Const., art. I, § 8) because DVD CCA’s trade secrets have been publicly disclosed and are no longer secret. We leave the resolution of these issues for the Court of Appeal on remand.
Bunner does not challenge the constitutionality of California’s trade secret statutes.
For the same reason, those cases where the United States Supreme Court found unconstitutional statutes or injunctions prohibiting or penalizing the disclosure of confidential information lawfully obtained and substantially related to a matter of public significance are inapposite. (See The Florida Star v. B.J.F. (1989)
On remand, the Court of Appeal should determine whether the preliminary injunction, including this portion, is justified under California’s trade secret law.
Associate Justice of the Court of Appeal, First Appellate District, Division Four, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
Associate Justice of the Court of Appeal, Third Appellate District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
Concurrence Opinion
I write separately because I agree partly with the majority and partly with Justice Moreno. I agree with the majority’s conclusion that the First Amendment to the United States Constitution does not necessarily preclude injunctive relief in trade secret cases. I find in Justice Moreno’s concurring opinion, however, a more satisfying reconciliation of that conclusion with the constitutional rules governing prior restraints and content-based restrictions of speech.
Concurrence Opinion
I concur in the majority’s narrow holding, which, as I understand it, is that the First Amendment does not categorically prohibit preliminary injunctions to enjoin the publication of trade secrets. I further agree that the First Amendment requires independent appellate review of such preliminary injunctions, rather than the deferential review usually accorded such injunctions. I write separately for two reasons. First, I believe there is a need to clarify how the prior restraint doctrine under the First Amendment applies to the publication of alleged trade secrets. Second, I would forgo further proceedings in the Court of Appeal and simply affirm that court’s judgment. In my view, the DVD Copy Control Association’s (DVD CCA) trade secret claim against Bunner is patently without merit for the reasons explained below.
I.
I agree with the majority that computer code is a form of speech under the First Amendment. “Because computer code ‘is an expressive means for the exchange of information and ideas about computer programming’ [citation], ‘we join the other courts that have concluded that computer code, and computer programs constructed from code can merit First Amendment protection.’ ” (Maj. opn., ante, at p. 876.)
I also agree with the majority that the doctrine of prior restraint is not a model of clarity, and that the definitions of and justifications for the doctrine do not constitute a coherent doctrinal unity. (See Tribe, American Constitutional Law (2d ed. 1988) pp. 1039-1042 [noting that the “prior” in prior restraint can mean both prior to publication and prior to the full adjudication of the merits].) But the majority correctly identifies one of the meanings of and reasons for the prohibition against prior restraint, quoting Pittsburgh Press Co. v. The Pittsburgh Commission on Human Relations (1973)
The same distinction was recognized by this court in Aguilar v. Avis Rent A Car System, Inc. (1999)
The present case involves a preliminary injunction issued prior to “a final adjudication on the merits that the speech is unprotected.” Hence, the danger posed by prior restraint is present. In general, a prior restraint comes with a “ ‘heavy presumption’ against its constitutional validity.” (Organization for a Better Austin v. Keefe (1971)
The majority at one point seems to suggest that the bar against prior restraint never applies to trade secret publication cases if a court has made a preliminary finding that a defendant’s prior conduct has been unlawful. It generalizes that the United States Supreme Court “has declined to apply prior restraint analysis to a permanent injunction (Madsen [v. Women’s Health Center (1994)] 512 U.S. [753,] 763, fn. 2) and a preliminary injunction (Schenck v. Pro-Choice Network of Western New York (1997)
The majority’s analysis of the above cited cases is incomplete. A closer reading of these cases reveals that the United States Supreme Court declined to apply prior restraint analysis not simply because those cases concerned findings of past unlawful conduct, but also because they did not involve censorship of speech but merely limits on its time, place and manner. For example, footnote 2 of Madsen, on which the majority relies, states that prior restraint is not applicable because “petitioners are not prevented from expressing their message in any one of several different ways; they are simply prohibited from expressing it within the 36-foot buffer zone. Moreover, the injunction was issued not because of the content of petitioners’ expression . . . but because of their prior unlawful conduct.” (Madsen, supra,
Our opinion in Planned Parenthood Shasta-Diablo, Inc. v. Williams (1994)
In Thomas v. Chicago Park District (2002)
The preliminary injunction in this case is subject-matter censorship entirely prohibiting Bunner from publishing a particular type of information related to the DVD CCA’s content scrambling system (CSS) and the descrambling program (DeCSS), not a content-neutral time, place, and manner regulation. (See also Oregon ex rel. Sports Mgmt. News v. Nachtigal (Or. 1996)
The question, then, is how should a court balance First Amenclment protections with an alleged trade secret holder’s property rights when asked to issue a preliminary injunction against publication? The answer lies in requiring the plaintiff to make a sufficient evidentiary showing before the injunction is granted.
The majority recognizes that a preliminary injunction against the disclosure of an alleged trade secret without sufficient evidentiary support is an unlawful prior restraint. As it states in discussing Bridge C.A.T. Scan Associates v. Technicare Corp. (2d Cir. 1983)
I agree, but this conclusion raises the question of what evidentiary showing a plaintiff should be required to make in order to overcome the presumption against a prior restraint. Ideally, the required showing for granting preliminary injunctions would separate meritorious trade secret claims from those involving protected speech. A court is to grant a preliminary injunction only if it finds a “ ‘likelihood that the plaintiff will prevail on the merits at trial’ ” as well as that the interim balance of harms favors the plaintiff. (Cohen v. Board of Supervisors (1985)
In my view, the need to safeguard the First Amendment right against prior restraint, while not barring trade secret holders from obtaining preliminary injunctions, requires that we make the standard for granting such injunctions more rigorous. As Professor Redish has stated: “[Bjecause such prior restraints are imposed by a judicial officer following some form of adversarial judicial process, the heavy negative presumption traditionally associated with the prior restraint doctrine is inappropriate. Nevertheless, because prior restraints are issued following only an abbreviated judicial inquiry, they are properly employed only if the asserted governmental interest could not be adequately protected by regulation following a full adversarial trial and only if the court determines that a strong likelihood exists that the government will be able to establish that the challenged expression is regulable under substantive first amendment standards. . . . The traditional equitable principle that the issuance of such preliminary relief is largely a matter of the court’s discretion . . . would have to change. Such broad discretion is not consistent with first amendment concerns, and any court issuing such preliminary relief against expression should expect no deference in the course of appellate review.” (Redish, supra, 70 Va. L.Rev. at pp. 88-89, fns. omitted.)
A preliminary injunction in the case of an alleged trade secret publication may be appropriate because the trade secret holder’s property rights “could not be adequately protected by regulation following a foil adversarial trial.” (Redish, supra, 70 Va. L.Rev. at p. 88.) But when a publication presumptively protected by the First Amendment is alleged to contain trade secrets, the broad discretion usually granted trial courts in these matters should be, while not eliminated entirely, considerably narrowed. A mere showing that the questions of law or fact are grave and difficult would be insufficient to warrant a preliminary injunction. Rather, a plaintiff should be required to actually establish a likelihood of prevailing on the merits, regardless of the balance of harms.
The majority, as I understand it, implicitly acknowledges this heightened standard when it holds, based on general First Amendment principles, that a trial court’s determination in these cases would be subject to independent appellate review. As the majority states: “[T]he Court of Appeal must . . . ‘make an independent examination of the entire record’ (Bose Corp. v. Consumers Union of U.S., Inc. (1984)
In sum, a preliminary injunction on speech issued without a credible determination that plaintiff will prevail on the merits is a quintessential case of suppressing speech “ ‘before an adequate determination that it is unprotected by the First Amendment’ ” (Pittsburgh Press Co., supra,
II.
As we recently reaffirmed: “ ‘[Bjecause unnecessarily protracted litigation would have a chilling effect upon the exercise of First Amendment rights, speedy resolution of cases involving free speech is desirable.’ ” (Winter v. DC Comics (2003)
As explained in the majority opinion, Bunner is alleged to have downloaded from the Internet and republished the DeCSS source code incorporating CSS, the DVD CCA’s proprietary information. The general rule is that
Civil Code section 3426.1, subdivision (d) defines “trade secret” as “information, including a formula, pattern, compilation, program, device, method, technique, or process, that: [1] (1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and [f] (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” A legislative committee comment further states: “The language ‘not being generally known to the public or to other persons’ does not require that information be generally known to the public for trade secret rights to be lost. If the principal person who can obtain economic benefit from information is aware of it, there is no trade secret. A method of casting metal, for example, may be unknown to the general public but readily known within the foundry industry.” (Legis. Com. com., 12A pt.1 West’s Ann. Civ. Code (1997 ed.) foll. Civ. Code, § 3426.1, p. 239 (Legislative Committee Comment).)
The Legislative Committee Comment further explains the original draft defined a trade secret in part as “not being readily ascertainable by proper means” and that “the assertion that a matter is readily ascertainable by proper means remains available as a defense to a claim of misappropriation. [I] Information is readily ascertainable if it is available in trade journals, reference books, or published materials.” (Legis. Com. com., 12A pt. 1 West’s Ann. Civ. Code, supra, foll. Civ. Code, § 3426.1, p. 239.)
Therefore, had Bunner obtained DeCSS information from a computer magazine or a newspaper, the information would be considered “readily ascertainable” and not a trade secret. Instead, he learned of DeCSS from a computer discussion group and downloaded it from a Web site on the Internet. The date of Bunner’s initial posting is unclear from the record, and the availability of DeCSS on the Internet at the time of the posting is also not clear. The DVD CCA’s attorney declared that at the time the complaint against Bunner and others was filed in December 1999, approximately two months after the initial posting, at least 118 Web sites had been identified that either contained proprietary information related to CSS or provided links to other Web sites with such information. How can information published in a computer magazine be regarded as “readily ascertainable” but not information
Courts that have considered the matter have agreed that, generally speaking, a party not involved in the initial misappropriation of a trade secret cannot be prosecuted under trade secret law for downloading and republishing proprietary information posted on the Internet, primarily because the information is in the public domain and is no longer secret. (Religious Technology Center v. Netcom On-Line Communications Services, Inc. (N.D.Cal. 1995)
The trial court, in preliminarily concluding that the trade secret was not lost, stated: “Plaintiffs moved expeditiously, reasonably and responsibly to protect their proprietary information as soon as they discovered it had been disclosed by investigating, sending cease and desist letters all over the world and then filing suit against those who refused within two months of the
That is not to say that a trade secret is automatically lost any time it is posted on the Internet. Amici curiae Intellectual Property Law Professors et alia argue, for example, that information posted on an obscure Internet site and detected quickly should not lose trade secret status. This position is consistent with case law holding that minor disclosures of a trade secret followed by a brief delay in withdrawing it from the public domain do not cause trade secret status to be lost. (Hoechst Diafoil Co. v. Nan Ya Plastics Corp. (4th Cir. 1999)
III.
In sum, the DVD CCA has failed to establish that the information Bunner republished was still secret at the time he republished it on his Web site.
Therefore, I conclude that the trial court’s preliminary injunction against Bunner was an unlawful prior restraint. Accordingly, instead of remanding to the Court of Appeal for further proceedings, I would affirm its judgment on the alternate grounds stated above.
Appellant’s petition for a rehearing was denied October 15, 2003, and the opinion was modified to read as printed above. Kennard, J., Baxter, J., and Chin, J., did not participate therein.
In further support of its claim that the prior restraint doctrine does not apply, the majority quotes without discussion the statement in Dallas Cowboys Cheerleaders, Inc. v. Pussycat Cinema, Ltd. (2d Cir. 1979)
It should also be noted that the Court of Appeal properly rejected the DVD CCA’s reliance on copyright cases in arguing that preliminary injunctions should be routinely granted. As the Court of Appeal stated: “Protections for trade secrets ... are not comparable to protections for copyrights with respect to the First Amendment. First, since both the First Amendment and the constitutional authority underlying the Copyright Act are contained in the United States
I note that the above standard applies only when there is no indication that the trade secret involves matters of public concern, as in the present case. As the majority suggests, when public concern is implicated, the burden of overcoming the presumption against prior restraint would be substantially higher. (See New York Times v. United States (1971)
I note that since the time the preliminary injunction went into effect, it appears that the DVD CCA’s proprietary information has been widely distributed. According to several uncontradicted declarations attached to Bunner’s motion to dismiss for mootness, filed in this court on February 7, 2003, DeCSS remains available at hundreds of locations on the Internet. Moreover, CSS and its algorithms and keys have been the subject of extensive academic research and discussion, including technical papers describing and analyzing CSS, and computer science courses in which the methods and flaws of CSS encryption are taught.
Moreover, in assessing the balance of harms, the trial court neglected to consider the harm to Bunner’s First Amendment rights. (See American Booksellers Association, Inc. v. Superior Court (1982)
I also note that it is highly doubtful the alleged trade secret was acquired by improper means within the meaning of the trade secret law. Civil Code section 3426.1, subdivision (a), defining “improper means,” states “[r]everse engineering . . . alone shall not be considered improper means.” Apparently the word “alone” refers to the fact that the item reverse engineered would have to be obtained “by a fair and honest means, such as purchase of the